Smart Money Concepts reads a chart as a record of how large participants accumulate and distribute positions. It is built from a few repeatable pieces, and once you know them you can label almost any chart in a minute.
Structure is the sequence of swing highs and swing lows. An uptrend makes higher highs and higher lows; a downtrend makes lower highs and lower lows. Everything else in SMC is read against that backdrop.
A Break of Structure (BOS) is a candle close beyond the last swing point in the direction of the trend — it signals continuation. A Change of Character (CHoCH) is the first close beyond a swing point against the trend, such as a close below the last higher low in an uptrend. It is an early warning that control may be shifting, not proof of a reversal.
| Event | What happens | What it suggests |
|---|---|---|
| BOS up | Close above last swing high in an uptrend | Trend continues |
| CHoCH down | Close below last swing low in an uptrend | Trend may be changing |
An order block is the last opposite candle before the impulse that created the break. A bullish order block is the last down-candle before a rally that broke a high. Traders watch it for a reaction on the first return. If price closes beyond the block, it is considered invalid.
A fair value gap is an imbalance between candle one and candle three. Liquidity pools are the equal highs, equal lows and prior-day extremes where stop orders collect. SMC traders note where those pools are because price often moves to them.
Take the current range and mark its midpoint. Prices above are premium (a place sellers prefer), prices below are discount (a place buyers prefer). Buying a bullish order block in discount is a stronger idea than buying one in premium.
The Smart Money option in the Forextity scanner marks BOS and CHoCH, the nearest order blocks and fair value gaps, liquidity pools and whether price is in premium or discount, for your chosen trading style. It is educational analysis, not a signal.
See it on a live chart. Choose a strategy, a trading style and a pair — Forextity does the technical analysis for you.
Open the Strategy Scanner →Risk notice: this article is educational and is not financial advice. Trading leveraged products carries a high risk of loss. Read our Risk Disclaimer.
