Understanding Smart Money Concepts: CHoCH and BOS entries
If you were a trader like me, that was having a hard time understanding Change of Character and Break of Structure concepts for a long time, I hope that this example gives you clarity to be able to identify entries better.
So let's begin!
The first thing you want to identify are high timeframe points of liquidity (AT, BELOW or NEAR) highs and lows.
In this example, we have identified a clear zone around 14800 and 14700 on the 4hr chart. Once price dips into that area, we take things down into the 1min timeframe to look for a structural SMC analysis.
This next chart shows you how to come up with specific structural points that will give you a better clue about a potential reversal (as in our case) or continuation. In this idea, we will specifically talk about reversals.
In any reversal near a point of interest, it is important for price to develop both a CHoCH, and BOS. The BOS is necessary so that price shows us a clear demand to continue the trend upward.
It is important to note, in the 1 min chart in my example, that once price has shown a CHoCH, price MUST come back to (or below) the price where the CHoCH broke out from, and create a new higher high (BOS).
Next, we wait for price to retrace at or below the CHoCH breakout, and RESPECT a liquidity point of entry (an FVG or an Order Block). Price must NOT confirm a CANDLE BODY below the lowest low on this retracement.
It is important to point out that there are occasions where the retracement from the high of the BOS actually comes all the way down to the low, breaks price with ONLY A WICK. This is to be understood as a grab of liquidity only, because a candle body did not confirm below the low.
From there, our entrance will either be at the high of a structure that was made WITHIN the BOS retracement, OR (like in our case there were not visible structures for entry) we can take a trade at the 50% premium discount zone, with our STOP at or a bit below the low the BOS made, target the high of our entire structure to the upside in the main chart.
I hope this tutorial helped some of you that have been struggling to understand smart money concept entries be able to have a better understanding of how and when to enter into trades at key reversal points of interest.
If you felt that this was useful, please drop a like on this idea.
So let's begin!
The first thing you want to identify are high timeframe points of liquidity (AT, BELOW or NEAR) highs and lows.
In this example, we have identified a clear zone around 14800 and 14700 on the 4hr chart. Once price dips into that area, we take things down into the 1min timeframe to look for a structural SMC analysis.
This next chart shows you how to come up with specific structural points that will give you a better clue about a potential reversal (as in our case) or continuation. In this idea, we will specifically talk about reversals.
In any reversal near a point of interest, it is important for price to develop both a CHoCH, and BOS. The BOS is necessary so that price shows us a clear demand to continue the trend upward.
It is important to note, in the 1 min chart in my example, that once price has shown a CHoCH, price MUST come back to (or below) the price where the CHoCH broke out from, and create a new higher high (BOS).
Next, we wait for price to retrace at or below the CHoCH breakout, and RESPECT a liquidity point of entry (an FVG or an Order Block). Price must NOT confirm a CANDLE BODY below the lowest low on this retracement.
It is important to point out that there are occasions where the retracement from the high of the BOS actually comes all the way down to the low, breaks price with ONLY A WICK. This is to be understood as a grab of liquidity only, because a candle body did not confirm below the low.
From there, our entrance will either be at the high of a structure that was made WITHIN the BOS retracement, OR (like in our case there were not visible structures for entry) we can take a trade at the 50% premium discount zone, with our STOP at or a bit below the low the BOS made, target the high of our entire structure to the upside in the main chart.
I hope this tutorial helped some of you that have been struggling to understand smart money concept entries be able to have a better understanding of how and when to enter into trades at key reversal points of interest.
If you felt that this was useful, please drop a like on this idea.
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