Introduction
Spotting the Market’s First Warning Signal
Every big market reversal starts with one subtle shift, a Change of Character, or CHoCH.
Before the breakout, before the new trend, the market whispers its intention through structure.
Learning to identify CHoCH gives traders the power to recognise potential reversals early, while most others are still trading the old trend.
Let’s explore what CHoCH really means, how to spot it, and how to use it alongside the Break of Structure (BOS) to stay one step ahead.
What Is a Change of Character (CHoCH)?
The Definition:
A Change of Character occurs when price violates a minor structural point.
Typically a short-term high or low, that contradicts the existing trend.
It signals that market momentum is shifting and that a possible reversal is developing.
📈 Example:
- In a downtrend, price forms Lower Lows and Lower Highs.
- If price suddenly breaks above the most recent Lower High, that’s a CHoCH. Buyers are showing strength.
📉 Conversely:
- In an uptrend, price forms Higher Highs and Higher Lows.
If price breaks below the most recent Higher Low, that’s a CHoCH. Sellers are starting to take control.
CHoCH vs BOS: What’s the Difference?
CHoCH and BOS often appear together, but they serve different purposes:
Concept | Meaning | Function |
CHoCH | Early shift in short-term structure | Signals possible reversal |
BOS | Break of a major structural high/low | Confirms new trend |
🧭 Think of CHoCH as the “heads-up” and BOS as the “confirmation.”
A CHoCH alerts you that momentum might be changing; BOS confirms that it has.
Why CHoCH Matters for Traders
✅ Early Reversal Detection
Spot potential turning points before trend confirmation.
✅ Better Entry Timing
Anticipate structure changes for precise, low-risk setups.
✅ Smart Risk Management
Use CHoCH as an early clue to tighten stops or secure profits.
CHoCH gives traders the context to prepare, not predict.
How to Identify CHoCH on TradingView
Follow these steps to visually mark a CHoCH when recording or analysing charts:
1️⃣ Start with Structure:
Identify the ongoing market trend, is it bullish or bearish.
2️⃣ Locate the Key Level:
Mark the most recent swing high or swing low within that structure.
3️⃣ Watch for Violation:
When price closes beyond that level, it indicates a Change of Character.
4️⃣ Confirm the Reaction:
Look for follow-through, is there displacement or momentum to validate. Confirm it’s not just noise.
5️⃣ Prepare for BOS:
After CHoCH, monitor for a full Break of Structure to confirm trend reversal.
💡 Pro Tip: Combine CHoCH with volume or liquidity sweeps to add confidence. Institutional moves often begin here.
Example
Bullish / Bearish
Bullish CHoCH
- Market is in a downtrend with Lower Highs and Lower Lows.
- Price breaks above the most recent Lower High.
- Buyers are stepping in, this is a possible start of a bullish reversal.
Bearish CHoCH
- Market is in an uptrend with Higher Highs and Higher Lows.
- Price breaks below the most recent Higher Low.
Sellers are gaining strength, this is a possible start of a bearish shift.
The Do Nots
Common Mistakes Traders Make
❌ Marking every pullback as CHoCH
→ It must break a valid structural point, not just minor fluctuations.
❌ Ignoring candle closes
→ Wait for a clear body close beyond structure. Wicks can deceive.
❌ Forgetting time-frame context
→ CHoCH on a 1-minute chart doesn’t override higher-timeframe bias.
💡 VWAP isn’t an entry line, it’s a bias and balance reference.
Final Thoughts
The Change of Character is your first clue that the story on the chart is changing.
It’s subtle, but powerful when combined with structure and confirmation.
Use CHoCH to prepare for opportunity, and BOS to confirm it.
Master both, and you’ll start trading the shift, not the aftermath.