Most traders know the basic idea of market structure: price makes highs and lows, then breaks them. The difficult part is knowing which highs and lows actually matter and how to map them consistently as the market develops.
A chart can look completely messy while still containing a clear structural framework. The key is having a mechanical way of identifying the current strong and weak highs and lows, recognising when the market changes character, and understanding what those structural points tell you about where price may move next.
In this lesson, I break down that process on a 16-hour chart, then show how the same rules can be applied across internal structure and multiple timeframes using the Structure Companion Tool.
What Is Market Structure?
Market structure is the framework used to understand how price is currently moving rather than simply looking at individual candles or isolated highs and lows.
The first step is identifying a meaningful break of structure.
In the example, price closes through a previous high, showing a potential continuation to the upside after a pullback and sweep of the previous high.
Watch the break of structure and potential sweep → 00:49
The important part is what happens after that break. Rather than immediately marking every visible turning point, the structure is mapped according to a defined process.
How to Identify a Strong Low
After the bullish break, the next step is identifying the current low.
The low is validated when price closes below the relevant candle’s low. This gives a mechanical reference point for the structure rather than relying on whichever low visually appears most significant.
Watch how the current low is identified → 01:21
This becomes the strong low because it is the last relevant low before price breaks through the structure to the upside.
Watch why this becomes the strong low → 02:00
The distinction is important because the strong and weak points give us a framework for understanding the current trading range.
How to Identify a Weak High
The opposite process is used to identify the weak high.
When the relevant candle closes below the previous candle’s low, the high becomes validated and can be marked as the current weak high.
Watch the weak-high validation → 02:12
We now have a defined structural range rather than simply a chart full of highs and lows.
That gives us the starting point from which the structure can continue to develop.
Watch the completed structural range → 02:39
What Happens When Market Structure Changes?
Structure isn’t static.
As price develops, the current high and low can be broken. When the market breaks in the opposite direction, the significance of that move needs to be understood.
In the example, price breaks down through the current low. Although this is technically another break of structure, the more important interpretation is that the market has moved from bullish to bearish.
This is the change of character.
Watch the bearish break and change of character → 03:32
Once the change of character occurs, the focus shifts to identifying the new bearish structure.
The same mechanical process is simply applied in the opposite direction.
Finding the New Strong High and Weak Low
After the bearish change of character, we look for the new current high.
The bullish candle that closes above the previous candle’s high provides the mechanical reference for the new high.
Watch the new strong high being identified → 04:01
Then the same process is used to identify the new weak low.
Watch the weak low being mapped → 04:23
This is the important structural rule: when the market changes direction, you don’t need to invent a new method. You apply the same structural process in the opposite direction.
Why Manually Mapping Structure Can Become Time-Consuming
Manually mapping structure is useful because it forces you to understand what the market is doing.
If you’re analysing one chart, manually working through the structure can help keep your understanding sharp.
But the problem becomes obvious when you want to analyse several currency pairs across multiple timeframes every morning.
You would need to repeatedly map:
- strong highs
- weak highs
- strong lows
- weak lows
- changes of character
- internal structure
- imbalances
That is where automation can remove repetitive work without changing the underlying structural rules.
Watch why the manual process becomes time-consuming → 02:48
Using the Structure Companion Tool
The Structure Companion Tool applies the mechanical structural rules to the chart so the relevant structure can be identified much faster.
The tool isn’t replacing the underlying process. It is automating the structural mapping that would otherwise need to be performed manually.
Watch the tool being introduced → 04:40
When the tool is turned on and the chart is replayed, the same change of character, weak low and strong high that were manually identified earlier are plotted automatically.
Watch the tool reproduce the same structure → 05:27
This allows the structural analysis to continue as new candles form rather than having to redraw the entire chart manually.
Internal Structure Matters Too
The larger swing structure isn’t the only structure worth watching.
There can also be internal structure inside the larger move, and this can change several times while the higher-level structure remains intact.
The tool can map this internal structure as well.
Watch the internal structure developing → 06:03
For example, price can shift bearish internally and then move bullish again without necessarily changing the larger structural picture.
This is why understanding the difference between internal structure and the larger swing structure is important.
When Repeated Changes of Character Create a Range
A particularly useful structural clue occurs when the market repeatedly changes character in both directions.
A bearish change of character followed by a bullish change of character can indicate that the market is becoming rangebound, rather than establishing a clean directional trend.
Watch the rangebound structure developing → 06:44
The market may continue producing bullish and bearish internal shifts while remaining within the larger range.
This is one reason simply labelling every break as a new trend can make a chart confusing. The wider structural context still matters.
How Imbalances Fit Into Market Structure
The structural framework can also be combined with imbalances.
In this methodology, the tool plots imbalances as dynamic zones. These represent areas of liquidity gaps left in the market that can influence where price moves next.
Watch the imbalance explanation → 07:27
When price closes through an imbalance, that imbalance is removed from consideration and attention can shift towards the next relevant area.
Watch the imbalance being removed after price closes through it → 08:04
This gives another layer of information alongside market structure.
Instead of asking only:
“Which direction is the market moving?”
you can also assess where the remaining structural and imbalance areas are located.
Using Structure to Anticipate the Next Move
Once the structure and remaining imbalances are mapped, they can provide a framework for understanding possible future price movement.
For example, after an imbalance is removed, the market may move towards another remaining imbalance or structural level.
Watch the expected move towards the next area → 08:24
The point isn’t that the market must follow one predetermined path. Rather, the mapped structure gives you areas to monitor and helps explain why price may be attracted towards particular levels.
Why Multiple Timeframes Matter
A structure that looks like a continuation or breakout on one timeframe can look completely different on a higher timeframe.
In the example, a high that appears to have been pushed through on the 16-hour chart is examined on the daily and weekly timeframes.
On the daily chart, the move is not treated as a sweep, while on the weekly chart it does appear as a sweep.
Watch the daily and weekly timeframe comparison → 09:00
This is why analysing structure across multiple timeframes can provide context that isn’t visible on a single chart.
Reading Liquidity Sweeps Through Structure
The market can also move through previous highs and lows to take liquidity before changing direction.
In the example, price moves through a previous high and then shifts bearish, creating a potential liquidity grab.
Watch the liquidity grab and structural shift → 08:49
The higher timeframe provides another perspective on the same movement, showing how a move that looks like a simple breakout on one timeframe can represent a sweep when viewed from another.
How Imbalances Can Help Explain Price Reactions
After the market shifts bearish, price returns towards a previous imbalance.
The area can provide a reference for where price may react, while the structural direction tells us how that reaction should be interpreted.
Watch price return to the previous imbalance → 09:27
Price subsequently fills the imbalance and moves away from the area.
Watch the imbalance fill and reaction → 09:58
This is another example of why mapping structure and imbalances together can give you a clearer picture of what is happening on the chart.
Understanding When a Low Is Actually Validated
One of the most important lessons in mechanical structure is not validating a high or low too early.
In the video, the market moves lower and appears to create what could become a valid low.
But the question is whether that low has actually been validated yet.
Pause and assess whether the low is valid → 13:01
The answer is no.
The market can still continue lower. Only after the required price action occurs does the low become validated.
Watch the low become validated → 13:32
This is a crucial difference between seeing a turning point and having a mechanically validated structural point.
Structure Does Not Mean Predicting Every Move
Once the structural framework becomes clear, it can be tempting to treat every mapped level as a prediction.
That’s not the purpose.
The structure provides information about the current state of the market and the areas that may become relevant. Price can still sweep a level, continue further, or change structure again.
For example, after price moves through an imbalance, there may not be an obvious reason on that timeframe for an immediate reversal.
Watch the example where there is no obvious reversal area → 13:47
This is why lower-timeframe analysis can be used to identify the actual reversal or execution model rather than simply entering because price has reached a level.
Combining Weekly, 16-Hour and 2-Hour Structure
The final section demonstrates how multiple timeframe structure can be displayed together.
Instead of repeatedly switching between the weekly, 16-hour and 2-hour charts, the tool can overlay the higher-timeframe structural information onto the execution timeframe.
Watch the multi-timeframe structure setup → 15:41
The example shows the 2-hour structure currently bearish while the higher timeframes remain bullish.
Watch the higher-timeframe structure alignment → 16:12
The weekly structure then provides additional context, including the 50% area and the previous weekly sweep.
Watch the weekly structure and sweep → 16:42
This allows the lower timeframe to be interpreted within the context of the larger market structure.
Finding a Potential Demand Area With Multiple Timeframes
Later in the example, the 16-hour structure moves into its 50% area and an imbalance while the 2-hour structure remains bearish.
A potential demand area can also be identified from the last sell-to-buy move on the 2-hour chart.
Watch the 16-hour 50% area, imbalance and potential demand → 17:27
Rather than automatically taking the demand area, the analysis looks for the lower-timeframe structure to develop.
A sweep of the previous low provides another piece of information before the market begins pushing higher.
Watch the sweep of the 2-hour low → 18:21
The key is that the higher timeframe, lower timeframe, liquidity and imbalance are being considered together.
The Mechanical Structure Rule
The core lesson from this chart is that market structure becomes much easier to read when you stop treating every visible high and low as equally important.
The process is mechanical:
Identify the structural break.
Validate the relevant high or low.
Classify the structural point as strong or weak.
Monitor for a change of character.
Continue mapping the new structure as price develops.
Use internal structure and imbalances to add context.
Use higher timeframes to understand the larger structural picture.
This gives you a repeatable way of reading a chart even when the price action initially looks messy.
Why This Matters for Trading
The goal isn’t to predict every candle.
It’s to build a consistent framework for answering questions such as:
- What is the current structural direction?
- Which high or low is actually valid?
- Has the market changed character?
- Is the market trending or becoming rangebound?
- Where are the remaining imbalances?
- Has liquidity been swept?
- What does the higher timeframe structure look like?
- Has the market actually validated the level I’m watching?
Once those questions can be answered consistently, a chart that initially looks chaotic becomes much easier to interpret.
And because the same process can be applied across different pairs and timeframes, the framework can be used as part of a repeatable daily analysis process.
Structure Companion Tool
The Structure Companion Tool was created to automate the mechanical structure rules shown throughout this lesson.
Instead of manually mapping every high, low, change of character and internal structure point across multiple pairs and timeframes, the tool plots the structural information so you can analyse the chart more efficiently.
Watch how the tool brings the higher-timeframe structure onto one chart → 15:41
If you want to use the tool yourself, you can find it here:
[ACCESS THE STRUCTURE COMPANION TOOL →]
And if you want to learn the full theory behind the structure, including the advanced structure and execution models used alongside it: