‘Market structure’ analysis on USDCHF [Nov’17]

Brief discussion on application of ‘market structure’ concepts to recent price action on USDCHF, together with relevant charts.

Earlier this year, I completed readings in the area of “market structure”.  Market structure is a method for analyzing and trading financial markets. My reading was mostly the German text compiled by Michael Voigt, but also saw the application of it by Carlos Diaz in an oil futures trading room.  Lastly, I found this Pepperstone article a simple and brief explanation of the topic.

Yesterday and today, I came across a good example of market structure across multiple timeframes on the USDCHF currency pair.  Felix, an Belgian independent professional retail trader based in Japan, also shared his view from his approach of analysing markets.  He is primarily a price-action based trader. His chart analysis for that is on here on TradingView.

Market structure is effectively identifying swing points, and then comparing the swing points to establish whether the market is making higher highs and higher lows (i.e. trending) or whether it is ranging.  The swing points are also good for establishing potential support/resistance levels, particularly if the swing points overlap on several timeframes  (on my charts you will see some H’s and L’s marked in various colours for this purpose).

Personally, I found using an ATR-based zig-zag indicator is a good approximation for objectively identifying swing points.  It took me quite a bit of work to get to that conclusion – not saying it’s an awesome solution – but it’s simple and it works for me.

Regardless, in any case, quickly sharing my charts on USDCHF – 1-hour, 4hour and daily timeframes.  Unfortunately I don’t have time to provide further commentary, but I thought it could be food for thought for somebody else.

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Hope you found that interesting.  Good luck for your trading sessions.

This entry was posted in Financial Markets 101, Trend-Following Strategy and tagged , , , . Bookmark the permalink.

2 Responses to ‘Market structure’ analysis on USDCHF [Nov’17]

  1. I’ve played around with zigzag for this purpose as well, but found it quite annoying that it redraws. Nevertheless, for some purposes it can still be useful. And thanks for the mention, George 🙂

    Liked by 1 person

    • Thanks for your comment Felix. Re Zig Zag, for the goal of assessing the trend, I only take into account the crystallized swing points and ignore any swing point that is still subject to change. That helps me avoid the ‘re-drawing issue’.


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