Technical analysis · Intermediate

Trendlines and Market Structure

Structure is the sequence of swing highs and lows. Read it first, and a trendline becomes a visual aid rather than the analysis itself.

Last reviewed 15 September 2026 by the MarketPro research desk · Editorial policy

In short

Market structure is the sequence of swing highs and swing lows on a chart. An uptrend prints higher highs and higher lows, a downtrend prints lower highs and lower lows, and a range holds between two fixed boundaries. A break of structure happens when a market fails to extend its trend and then trades through the swing point that defined it. Trendlines are a visual aid for that sequence, not a replacement for it.

What to remember

Structure outranks every indicator because it is not derived from price, it is price. When a trendline and the swing sequence disagree, trust the sequence.
A break of structure marks the moment a trend stopped being confirmed. It withdraws permission to keep trading that trend, it does not create a trade the other way.
Define a swing point with a fixed rule before you count one, or you will only notice the swings that agree with the trade you already wanted.
A structural level gives you an invalidation price, and an invalidation price is what makes a position size calculable instead of arbitrary.

Lesson 3 of 26 in Technical analysis

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Market structure is the sequence of highs and lows

Market structure is the order in which a market prints its swing highs and swing lows, and it is the first thing to read on any chart. An uptrend prints higher highs and higher lows. A downtrend prints lower highs and lower lows. A range holds between a defined high and a defined low without making progress either way. Before you open a single indicator, answer one question: what is the structure on the timeframe I am trading?

Structure is worth more than any derived tool because it is not derived. A moving average is an average of prices. An oscillator is a ratio of prices. A swing low is a price, and it is the price at which buyers actually turned the market. When a tool and the structure disagree, the structure is the harder evidence.

Define a swing point before you count one

Most arguments about whether a trend is intact come from two people using different definitions of a swing. Fix one and use it every time. A workable rule: a swing high is a candle whose high sits above the highs of the two or three candles on each side of it, and a swing low is the mirror image.

The rule is mechanical, which is the point. It stops you noticing the swing that supports the trade you already want and quietly ignoring the one that does not. It also means a swing is only confirmed a few candles after it forms, which is the honest cost of using a rule instead of an opinion.

A break of structure, dated and priced

Say EUR/USD bottoms at 1.0720, rallies to 1.0890, pulls back to 1.0805 and then pushes to 1.0960. That is a higher high (1.0960 clears 1.0890) and a higher low (1.0805 sits above 1.0720). The uptrend is confirmed, and 1.0805 is the specific price that defines it.

Now price stalls at 1.0945, fifteen pips short of the old high, and later closes at 1.0780. Two things happened in order. The market failed to make a higher high, then it traded through the last higher low. That sequence is a break of structure, and it is dated and priced. You do not need an opinion about it, because the chart printed it.

What a break of structure does and does not tell you

A break of structure tells you the previous trend has stopped being confirmed. It does not tell you a reversal is underway. Plenty of uptrends break one higher low, chop sideways for a fortnight and resume. What has changed is the evidence: until the market prints another higher high and higher low, you no longer have a trend, you have an undefined market, and trend tools underperform there.

So the consequence is about permission, not prediction. If your plan only takes longs inside an uptrend, a break of structure withdraws permission. It does not hand you a short.

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Drawing a trendline that is actually on the chart

Two points make a line, a third touch makes it interesting. Any two swing points can be connected. A line respected three times is being watched by other people, and shared attention is the only reason a diagonal works at all.
Prefer the obvious line. If most people looking at this chart would draw it identically, it matters. If it took you four attempts and a switch to log scale to find it, it does not.
Do not force a line through candle bodies. Decide in advance whether you connect wicks or closes, then stay consistent. Adjusting until the line touches more points is curve fitting with a mouse.
Treat it as a zone. A trendline is a diagonal approximation of a moving balance point. Expect reactions near it, not precisely at it.

Structure is what makes size calculable

Structure gives you an invalidation price, and an invalidation price is the only thing that makes position size calculable. If the higher low at 1.0805 is what defines the long, a stop at 1.0785 sits just beneath it, which is 40 pips of risk from an entry at 1.0825. Feed that stop distance and your account size into the position size calculator and you get a lot size that caps the loss at a fixed percentage. Without a structural level the stop distance is arbitrary, and so is everything downstream of it.

This is also why a properly written signal and a structure-based entry look alike. The stop sits where the idea is wrong rather than at a round number, which is one of the first things to check when you read a signal critically.

Four things that undermine the read

Steepening lines are unsustainable. Each new trendline drawn at a sharper angle describes acceleration, and acceleration ends. A break of a steep line usually returns price to the older, flatter one rather than reversing the trend.
Forex has no single price. Your broker's feed can print a swing low a pip or two from someone else's, and in a thin hour the gap widens. That alone is a reason to treat levels as zones.
Structure is timeframe-specific. A break of structure on the 5-minute chart inside a daily uptrend is a pullback. Say which timeframe you mean, every time.
The right edge is a different job. Scrolled back, every trendline is clean. At the hard right edge, half of them have not earned a third touch yet.

Write the sequence out in words

Take one pair, open the daily chart, mark every swing high and low for the past three months with your fixed rule, then write the sequence out in words: higher high, higher low, higher high, lower low. You will usually find two or three regime changes you had not noticed, and their dates tend to line up with something real. When they do, what actually moves price is the useful next read.

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Written and reviewed by the MarketPro research desk

MarketPro is a trading-signal and trading-education app operated by Harajuku Holdings LTD (Cyprus). Our signal desk publishes and tracks every trade idea in-app, and every page here is checked against the app's live behaviour before publishing. Last reviewed 15 September 2026. How we produce signals and content · About MarketPro

FAQ

Trendlines and Market Structure: questions

What is a break of market structure?

A break of structure is when a market trades through the swing point that defined its trend. In an uptrend that means closing below the most recent higher low, usually after failing to make a new high. It signals that the trend is no longer confirmed, which is different from signalling a reversal.

How many touches does a trendline need to be valid?

Two swing points are enough to draw a line, but a third touch is what makes it worth trading around. The power of a trendline comes from how many people are watching the same line, so a line that has visibly held three times carries more weight than one connecting two arbitrary points.

Should trendlines be drawn on wicks or candle bodies?

Either works as long as you pick one and apply it consistently. Wicks capture the full extreme price reached, while bodies filter out single-tick spikes and tend to give cleaner lines on volatile pairs. What matters is that you are not redrawing the line each time to make it fit the trade you want.

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