Break of Structure (BOS)
Overview
A Break of Structure occurs when price breaks a previous swing high (in an uptrend, confirming continuation) or swing low (in a downtrend, confirming continuation). BOS confirms the prevailing trend and is used to trail bias. Internal BOS occurs within a trend leg; external or structural BOS breaks the last significant swing.
Key Concepts
Bullish BOS: price breaks above a previous swing high. Bearish BOS: price breaks below a previous swing low. Internal vs. external structure breaks. Must close beyond the level (wick touches don't count in strict SMC). BOS establishes bias for pullback entries.
Entry Signals
After BOS confirms trend direction, trade pullbacks into FVGs or OBs, Wait for LTF confirmation after BOS on a higher timeframe, BOS + liquidity sweep of the interim swing = high-probability setup
Exit Signals
Trade in BOS direction until a Change of Character (ChoCH) occurs, Stop beyond the FVG/OB used for entry, Target the next liquidity pool in the BOS direction
Best Timeframes
Multi-timeframe: identify BOS on 4H/Daily, entry on 15M/1H
Pro Tips
BOS is a trend-continuation signal, not a reversal signal. Many new SMC traders confuse BOS with ChoCH. BOS means 'more of the same'. ChoCH means 'trend is changing'.
More Topics in This Category
Change of Character (ChoCH)
A Change of Character is the first break of structure AGAINST the prevailing trend. In an uptrend, ChoCH is the first lower low. In a downtrend, ChoCH is the first higher high. ChoCH signals a potential trend reversal and is one of the most important SMC concepts for identifying turning points.
Power of Three (PO3)
The Power of Three is an ICT concept describing the three-phase cycle that institutional traders use within each session or candle: accumulation, manipulation, and distribution. During accumulation, smart money builds positions quietly. Manipulation creates a false move to trigger retail stops and generate liquidity. Distribution is the real directional move where institutions deliver price to their target, profiting from the liquidity gathered during manipulation.
Mitigation Blocks
Mitigation blocks are price levels where institutional traders return to 'mitigate' or close out prior losing positions before continuing in the new trend direction. When smart money takes a position that initially moves against them, they mark the level for re-entry — when price returns, they close the losing trade at break-even and add to their new directional position. This creates a powerful support or resistance zone.
Inducement Patterns
Inducement is a Smart Money Concept describing the deliberate engineering of liquidity pools by institutional traders to attract retail orders before reversing price. Inducement patterns occur when price creates minor highs or lows that entice retail traders to enter positions or place stops, providing the liquidity that smart money needs to fill large orders in the opposite direction.