Chart school · Lesson 8

Change of character (CHoCH)

A CHoCH is the first break against the trend. In an uptrend, price closes below the last higher low. It is the first warning that the trend may turn.

Uptrend (HH, HL), then price closes below the protected higher low: CHoCH. A lower high (LH) forms, and the next break down is a BOS in the new downtrend.Teaching diagram, not real market data

	BOS	CHoCH
Direction	With the trend	Against the trend
Meaning	Trend continues	Trend may be changing
Use	Stay with the trend	Stop buying; on a small timeframe, an entry signal for the new direction

Key idea

A CHoCH on a small timeframe (5 or 15 minutes) at an important higher-timeframe place, such as a demand zone or after a liquidity sweep, is one of the most used entry signals in price action.

Careful

Many CHoCHs fail. One break does not turn a trend. On the higher timeframe, wait for the lower high and a BOS before you believe a new trend.

Quick check

In an uptrend, price closes below the last higher low. This is…

A BOSA CHoCHNothing

After one CHoCH on the 4-hour chart, is the trend surely down?

YesNo, wait for a lower high and a BOS downOnly if it is Friday