Market Structure¶

Understanding Break of Structure (BoS) and Market Structure Shift (MSS).

Trend Identification¶

Uptrend¶

Higher Highs (HH) and Higher Lows (HL):

           HH
          ╱  ╲
         ╱    ╲
       HL      ╲ HH
      ╱  ╲     ╱
     ╱    ╲   ╱
   HL      ╲ HL
  ╱         ╲╱

Downtrend¶

Lower Highs (LH) and Lower Lows (LL):

╲
 ╲ LH
  ╲╱╲
     ╲ LH
      ╲╱╲
         ╲ LH
          ╲╱╲
             ╲
              LL

Break of Structure (BoS)¶

BoS = Price breaks a swing point in the direction of the trend (continuation).

Bullish BoS (Uptrend)¶

Price breaks above a swing high:

                    ══════════════ BoS (break above HH)
                   ╱
       HH        ╱
      ╱  ╲      ╱
     ╱    ╲    ╱
   HL      ╲  ╱
            ╲╱
             HL

Bearish BoS (Downtrend)¶

Price breaks below a swing low:

   LH
  ╱  ╲
 ╱    ╲
╱      ╲ LH
        ╲╱╲
           ╲
            ╲
    ══════════════════════ BoS (break below LL)
              ╲
               LL

Market Structure Shift (MSS)¶

MSS = Price breaks a swing point against the trend (reversal signal).

Bullish MSS (Reversal from Downtrend)¶

Price breaks above a swing high during downtrend:

   LH
  ╱  ╲
 ╱    ╲ LH
╱      ╲╱╲
          ╲ LH
           ╲╱╲
              ╲        ╱
               ╲      ╱
                ╲    ╱
    ═══════════════════════════ MSS (break above LH)
                  ╲  ╱
                   ╲╱
                    LL

Bearish MSS (Reversal from Uptrend)¶

Price breaks below a swing low during uptrend:

                    HH
                   ╱  ╲
                  ╱    ╲
       HH       ╱      ╲
      ╱  ╲     ╱        ╲
     ╱    ╲   ╱          ╲
   HL      ╲ ╱            ╲
            ╳              ╲
    ════════════════════════════════ MSS (break below HL)
                            ╲
                             ╲
                              LL

Key Differences¶

Aspect	BoS	MSS
Direction	With trend	Against trend
Meaning	Trend continues	Potential reversal
Action	Look for continuation	Look for reversal setup
In RQF	First step of setup	Confirmation of reversal

In the Indicator¶

The indicator tracks structure breaks automatically:

BoS lines: Thinner, labeled "BoS"
MSS lines: Thicker, labeled "MSS"
Color: Green for bullish, Red for bearish

State Machine Connection¶

State 0: Looking for BoS
    │
    ▼ (BoS detected)
State 1: Looking for Sweep
    │
    ▼ (Sweep detected)
State 2: Looking for MSS
    │
    ▼ (MSS confirmed)
State 3: Ready for Entry

Next¶

RQF Pattern - The complete setup sequence
State Machine - How the logic tracks these breaks