Market Structure: The Technical Base that Defines Trend

[Igor Pereira]

Market Structure: The Technical Base that Defines Trend, Context and Direction

By Igor Pereira
Financial Market Analyst
Founder of ExpertFX School

Understanding market structure is understanding the language of price.

The structure is the technical skeleton that reveals who is in control: buyers or sellers. It shows what the market has done in the past, what it is doing now and what it is most likely to do next.

Exclusive analysis for ExpertFX School — Igor Pereira:
“Without understanding market structure, the trader operates isolated movements. With structure, it understands the flow.”

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What is Market Structure?

Market structure is the organized sequence of movements that the price builds over time.

She can perform in three main ways:

High Structure

• Follow-up Higher maximums (HH)

• Follow-up highest minimum (HL)

Indicates domain buyer.

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Low Structure

• Follow-up lower maximums (LH)

• Follow-up lowest minimum (LL)

Indicates domain seller.

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Consolidation

• Absence of clear sequence

• Horizontal tops and backgrounds

• Temporary balance between supply and demand

Indicates neutrality or transition.

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What's happening in the Bastidores?

When the market creates a higher minimum, it means buyers are defending ever higher levels.

When the market creates a lower maximum, it means that sellers are entering earlier and with greater force.

Structure is not opinion — it is repeated behavior.

In the XAU/USD, for example, a sequence of minimum ascendants in the Diary usually indicates institutional positioning buyer, often aligned with expectations of weakening the dollar or macro scenario favorable to gold.

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Structure in Different Timeframes

The structure exists in all periods of time:

• M15

• H1

• H4

• Journal

• Weekly

But every timeframe can show a different reality.

Practical example:

• Diary in high trend

• H1 in correction (temporary low-level structure)

In this case, the low movement in H1 may be just a retreat to form a new highest minimum in the Diary.

Igor Pereira reinforces:
“You may be right in M15 and completely wrong in the context of the Daily.”

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Why Is Understanding Structure Essential?

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Structure and Change of Character (Break of Structure)

A structural change occurs when:

• An important minimum is broken in high trend

• A relevant maximum is broken in low trend

This event may indicate:

• Reversion start

• Beginning of consolidation

• Change of institutional flow

In gold, structural ruptures in H4 or Daily often precede movements amplified by macroeconomic events.

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What to Expect when Operating on Structure-Based?

• Less impulsive operations

• Increased technical clarity

• More logical Stops

• Better reading of continuity or reversal

Structure allows the trader to operate probabilities, not emotions.

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Impact on the Financial Market

In scenarios of:

• Interest decisions

• Inflation data

• Changes in monetary policy

The structure can accelerate or break abruptly.

The market doesn't change direction because it looks expensive or cheap. It changes when the structure is broken.

In the XAU/USD, institutional movements respect structure in a technical and repetitive manner.

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Correction vs Reversal

One of the biggest mistakes is to confuse correction with reversal.

Correction:

• Movement against dominant trend

• Major structure intact

Reverse:

• Confirmed structural rupture

• Clear sequence change of maximums and minimums

This difference separates amateur traders from professionals.

What are the types of market structure?

The structure of the market can be high, low or none (we can identify this as a consolidation period).

Optimistic

As stated above, the optimistic market structure is a series of highest maximums and minimums in the markets. We can identify this series by seeing 2 or more sets of higher maximums and minimums as shown below.

As you can see above, the structure of the market throughout this high movement was creating continuous highs and lows. Of course the market structure is not EXATA, and that is why negotiating is so difficult, there is no EXACT path that the price will take ALL at times, but you must understand the general concept and be able to adjust to market conditions.

As you can see, the first HH and HL are not really high structures, during that time the market is still in a low structure, but when the first HL happens, we can begin to anticipate that markets could be starting a high trend.

Low trend

The low market structure is a series of lower maximums and minimums on the markets. We can identify this series by seeing 2 or more sets of acute and lower minimums, as shown below.

This is an example of text book of the low market structure in a couple of currencies. Over the past few weeks, GBP has shown a beautiful downward trend, creating nothing but LH and LL. It is clear that, even in great downward trends, we MUST retreat in order to collect liquidity to continue the movement to the lower side, which is how this market structure is created. The market structure begins with a high, so we break the previous minimum and create a new minimum. What we're waiting for now is a lower high to graduate and then it's execution time, which we'll talk about later.

Consolidation

In times of consolidation in markets, we will see that essentially there is no creation of HH or LL because the market is in a state of balance, an example is below.

In market times of this nature, it is essential to have patience and understand that. Most dealers win easily in trend markets by losing in times like this. We must wait for a fundamental reason to enter during that time or wait for a break and the structure of the market to be resumed.

Breaking the market structure

For markets to rise and fall, there must be a break in the structure of the market. A break in the market structure occurs when the market begins to change direction and break the previous HH and HL or HL and LL of the market. An example is shown below.

The market is in a clear downward trend, creating a pattern of LH and LL, but at the bottom we have one last down. After that, we broke the previous LH, which for me is a great indicator (if following an HL, what happened) that the market is changing. After we create a new high, it signals that the market has changed 100%. After we identify this, you should be able to execute.

Implementation

The market structure is not a trading strategy or configuration, it is more an understanding that allows you to be able to see how the general market conditions are. The goal of running with market structure is to use it and understand it to be able to run sets including FTR, FTB, break out strategies to and from different zones.

The field of technical terminology is an essential part of professionalisation in the financial market. Each concept below represents a part within the structural gear that moves the price.

Exclusive analysis for ExpertFX School — Igor Pereira:
“Who understands the institutional language of the market can interpret intention, not just movement.”

Next, I present a detailed technical glossary with practical application, especially relevant to the XAU/USD and other global assets.

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Liquidity Reference Levels

PDH (Previous Day High) - Top of the day before.
Common liquidity area and possible institutional sweeps.

PDL (Previous Day Low) - Minimum of the day before.
Region where sales stops are often positioned.

PWH (Previous Week High) - Maximum of the week before.
Important structural level in HTF analyses.

PWL (Previous Week Low) - Minimum of the week before.
Strategic zone to identify possible manipulations.

RN (Round Numbers) - Round numbers.
Ex: 2000 in gold. Strong psychological concentration of orders.

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Market Structure

MS (Market Structure) – Market structure.
Maximum and minimum sequence defining trend.

BOS (Break of Structure) – Breaking the market structure.
Confirms trend continuity.

BMS (Break in Market Structure) – Structural break indicating possible transition.

SMS (Shift in Market Structure) – Deeper structural change, indicating possible reversal.

HH (Higher High) - Highest.
HL (Higher Low) - Minimum highest.
LH (Lower High) - Lower maximum.
LL (Lower Low) - Minimal lower.

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Liquidity and Manipulation

LP (Liquidity Pool) – Liquidity pool.
Region where stops and pending orders accumulate.

SSL (Sell Side Liquidity) - Liquidity on the selling side.

BSL (Buy Stop Liquidity) - Liquidity on the buyer side.

SH (Stop Hunt) - Stop hunting.
Strategic move to capture liquidity before real displacement.

EQH (Equal High) - Same maximums.
It attracts buyer liquidity.

EQL (Equal Low) - Minimum equals.
It attracts sales liquidity.

LVG (Liquidity Void Gap) – Liquidity void lacuna.
Quick shift area with low intermediate trading.

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Institutional Concepts

OB (Order Block) – Institutional block of order.
Last sail before a significant displacement.

RTO (Return to Origin) – Return to the origin of the movement.

FVG (Fair Value Gap) – Unbalance between supply and demand in the graph.

EC (Consequent Encroachment) – 50% of FVG, balance zone.

BISI (Buy Side Imbalance Sell Side Inefficiency) – Unbalance buyer / inefficiency seller.

SIBI (Sell Side Imbalance Buy Side Inefficiency) – Disbalance seller / inefficiency buyer.

IOF (Institutional Order Flow) – Institutional flow of orders.

IPDA (Interbank Price Delivery Algorithm) – Interbank price delivery algorithm (scheduled flow theoretical concept).

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Strategic Models

OTE (Optimal Trade Entry) – Ideal entry based on strategic retraction.

AMD (Accumulation, Manipulation, Distribution) – Model of accumulation, manipulation and distribution.

PO3 (Power of Three) – Power of 3, concept derived from the AMD model.

OSOK (One Shot One Kill) – Single execution with strategic precision.

TS (Turtle Soup) – Strategy based on false breakup.

WDYS (What Do You See) – Subjective interpretation of graphic reading.

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Timeframes

HTF (Higher Time Frame) - Longer period.
Defines structural bias.

LTF (Lower Time Frame) - Minor period.
Refine execution.

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Macroeconomic Indicators and Data

COT (Commitment of Traders) – Institutional positioning report.

NFP (Non-Farm Payroll) - Payroll from America.
Event that generates strong volatility in gold and dollar.

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Price Action

PA (Price Action) – Direct interpretation of price behavior.

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XAU/USD application

In gold, concepts like:

• PDH/PDL Liquidity

• EQH/EQL Scan

• Return to OB

• FVG reaction

They are recurrent and amplified by macro events such as inflation and interest decisions.

Igor Pereira highlights:
“In XAU/USD, liquidity precedes displacement. Who understands where the retail stop is understands where the price can go first.”

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What to Expect when Mastering These Concepts?

More strategic operations

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Conclusion

This glossary represents the technical vocabulary of the trader who seeks to operate with an institutional mentality.

It is not about decorating acronyms, but about understanding the context in which each concept applies.

Exclusive conclusion — Igor Pereira:
“The market leaves structural clues all the time. The difference is in who knows how to interpret them.”

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The full institutional reading methodology applied to XAU/USD and other global assets is available exclusively at ExpertFX School.

Igor Pereira
Financial Market Analysis
Junior Wall Street Member – NYSE
Specialist in Structure, Liquidity and Institutional Flow

[Leandroafc]

Que aula, valeu esmagar!!!!!

[Famael]

No college equals... congratulations and thank you very much!

[Juliana Lima]

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