A Break of Structure (BOS) is a simple but powerful idea in price‑action trading: it marks the moment when price decisively moves past a prior swing high or swing low and, in doing so, alters the sequence of highs and lows that defined the recent trend. For a trader watching charts, a BOS is a signal that the market may be changing its story — either continuing a trend with renewed strength or beginning the first step of a larger reversal. Below I explain what a BOS looks like, how traders typically use it, how to tell a real break from a false one, and practical rules you can apply across timeframes.
How a Break of Structure Happens (the basic idea)
Markets make trends by alternating highs and lows. In an uptrend the pattern is higher highs and higher lows; in a downtrend it is lower lows and lower highs. A BOS happens when price creates a new extreme that breaks that pattern: in an uptrend a bullish BOS is a clear close above the most recent swing high; in a downtrend a bearish BOS is a close below the most recent swing low. That new close changes the sequence of structure and signals that one side — buyers or sellers — has gained control.
Imagine a pair that has been making three higher highs and three higher lows. When a candle closes convincingly above the last high, the market has produced a bullish BOS: the sequence of highs has extended and the uptrend is, at least technically, intact and potentially strengthening. Conversely, if a down move closes below the last low, the trend’s momentum is confirmed to the downside.
Bullish vs Bearish BOS — a concrete example
Think about EUR/USD on a multi‑day chart. The pair has been rising, making a clear higher low at 1.0800 and a prior high at 1.0920. Price rallies, pierces 1.0920 and closes the daily candle above it. That close beyond the prior high is a bullish BOS: traders who respect structure view it as confirmation that buyers pushed through resistance and may target the next logical resistances or liquidity pools above.
On the flip side, imagine GBP/JPY in a downtrend: recent swings show a lower high at 165.30 and a lower low at 162.10. A daily close below 162.10 would be a bearish BOS, suggesting sellers remain in control and the move lower could continue.
Variants of BOS traders talk about
Traders use slightly different labels to capture nuance. An internal BOS (iBOS) refers to a break of a smaller swing inside a larger range — it can be useful for short‑term intraday entries. An external or major BOS (eBOS) refers to a break of a higher‑timeframe swing that matters to the broader trend. Traders also talk about liquidity‑related BOS (sometimes called a liquidity sweep) where price temporarily clears above a high or below a low to trigger stops before reversing; this can make a move look like a break when it is actually a stop hunt. The core idea remains the same: a valid BOS is a decisive close beyond a meaningful swing, preferably backed by context.
How to identify a valid BOS — step by step
Start by mapping the recent swing highs and lows on the timeframe that defines your bias. Use a higher timeframe (for example daily or 4‑hour) to set trend direction, then drop to a lower timeframe to refine entries. A genuine BOS usually meets three practical tests in sequence: price closes beyond the prior swing (not just a wick), the break holds on a retest of the broken level, and price action shows momentum in the direction of the break (strong candles, follow‑through).
Volume or participation often helps confirm a break, but be careful with forex: spot forex volume is fragmented and broker volume is not a perfect market volume measure. Instead, look for supporting evidence such as a sequence of strong directional candles, range expansion, or price failing to reclaim the level after a retest. Waiting for a retest is a conservative, commonly used filter: the old resistance becomes new support after a bullish BOS, and the old support becomes resistance after a bearish BOS.
How traders typically use BOS in entries and risk management
Traders rarely buy or sell on the first touch of a broken level without confirmation. A common, practical workflow is to identify a BOS on a higher timeframe, wait for a retest or a clean pullback to the broken level, and then look for a lower‑timeframe confirmation candle to enter. Entry triggers vary: some traders enter on the first bullish engulfing candle on a retest after a bullish BOS; others use a break of a short‑term minor structure on a lower timeframe as the signal.
Stop placement usually sits below the retest low after a bullish BOS (or above the retest high after a bearish BOS). Many traders size positions so that a loss, if the stop is hit, equals a small percentage of account equity (a common guideline is 1–2% of equity per trade). Profit targets can use prior structure, measured moves, or scaled exits — for example taking partial gains at the next obvious swing and letting the remainder run with a trailing stop.
Multi‑timeframe perspective — why it matters
Not all BOS signals are equal. A daily BOS carries more weight than a 15‑minute one because it reflects broader participation and deeper liquidity. Traders often use a top‑down approach: define the bias on the daily, find BOS zones on the 4‑hour or hourly as potential trade locations, and time entries on 15–30 minute charts. If BOS on a lower timeframe contradicts the higher‑timeframe bias, it is often treated as noise or a counter‑trend move. The highest probability setups occur when BOS aligns across multiple timeframes.
Common mistakes and how to avoid them
A frequent mistake is treating any wick beyond a swing as a valid break. Wicks can be liquidity grabs that reverse quickly. Waiting for a real candle close beyond the swing and a retest reduces these false signals. Another error is ignoring higher‑timeframe structure: trading a bullish BOS on a 5‑minute chart while the daily shows a strong downtrend increases the chance of being wrong. Overtrading every minor break and failing to use a stop are other common issues. The remedy is simple discipline: define your structure on a higher timeframe, require confirmation, manage risk, and keep a trading log so you learn which conditions work best for you.
BOS, Change of Character (ChoCh) and Market Structure Shift (MSS) — brief clarification
These terms are related but not identical. A Change of Character (ChoCh) usually refers to the first sign that the market’s behavior is different — for example, a bullish market that fails to make another higher high and instead breaches a prior higher low. A BOS is a clear break beyond a swing in the market’s current direction and often confirms continuation. A Market Structure Shift (MSS) is a larger reorganisation of highs and lows that confirms a new trend is forming. In practice, traders watch for ChoCh as an early warning, BOS as confirmation signals for entries, and MSS as evidence that a longer trend has changed.
Practical example: trading a bullish BOS with a retest
Suppose USD/CAD has been trending higher on the daily chart and recently made a swing high at 1.3200. Price breaks above that level and the daily candle closes at 1.3245 — a bullish BOS. After the break, price pulls back to 1.3220 and forms a small consolidation. On the 1‑hour chart a strong bullish candle closes above the consolidation, offering a lower‑timeframe confirmation. A trader might place a buy order just above that confirmation candle, set a stop a few pips below the consolidation low, and target the next resistance or a risk‑reward ratio they are comfortable with. If price instead drops back below 1.3200, the stop would contain the loss; if price rallies, the BOS has delivered the follow‑through the trader sought.
Risks and caveats
Trading on breaks of structure is not a guarantee of profit. Markets are influenced by many factors — macro news, central bank decisions, sudden liquidity changes — and a valid BOS on one timeframe can be noise on another. Forex markets are decentralized and volume indicators available to retail traders can be misleading; use them cautiously. False breakouts and liquidity sweeps are common, so rely on confirmations (closes, retests, follow‑through) and strict risk management rather than trading purely on instinct. Never risk more than you can afford to lose, and remember that past patterns do not ensure future results. This information is educational and not personalized trading advice; do not take it as a recommendation to trade specific instruments.
Key Takeaways
- A Break of Structure (BOS) occurs when price closes decisively beyond a prior swing high or low, changing the sequence of highs and lows that defined the recent trend.
- Traders use BOS as confirmation: wait for a clean close, a retest of the broken level, and a lower‑timeframe confirmation before entering.
- Higher‑timeframe BOS are stronger; apply a top‑down approach to align bias, trade location, and entry precision.
- Trading carries risk; use stops, manage position size, and treat this as education rather than personalized advice.
References
- https://www.xs.com/en/blog/break-of-structure/
- https://fxopen.com/blog/en/what-is-a-break-of-structure-and-how-can-you-trade-it/
- https://www.fluxcharts.com/articles/Trading-Concepts/Price-Action/Break-of-Structures
- https://eplanetbrokers.com/en-US/training/break-of-structure-explained
- https://www.youtube.com/watch?v=SnQ0f2c2CrE
- https://www.tradingview.com/chart/XAUUSD/yaWPnq9H-Simple-Break-of-Structure-BoS-Trading-Strategy-Explained/
- https://innercircletrader.net/tutorials/break-of-structure-bos/