A break of structure (BOS) happens when price closes beyond a previous swing point in the same direction as the existing trend. In an uptrend, that means a candle closing above the most recent swing high. In a downtrend, a candle closing below the most recent swing low.
What it is telling you
A BOS is evidence that the trend is continuing: buyers (in an uptrend) were strong enough to push price past a level where sellers had previously been able to turn it back. It confirms that the sequence of higher highs, or lower lows, is still being produced.
A common definition, and why you need one
Different traders define a break differently. Some require a candle body to close beyond the level. Others accept a wick. A common and conservative choice is the body close, because wicks are easily produced by brief spikes. Whichever you pick, write it down and use it every time, so that your analysis does not change depending on what you hope to see.
What a BOS is not
- It is not a prediction that price will keep going. It describes what has already happened.
- It is not a trade signal on its own. A break can be followed immediately by a reversal.
- It is not the same as a change of character, which is a break against the trend. You will study that in the next category.