The one rule: compare like with like
Once the swings are identified, each is labelled by comparison with the previous swing of its own kind:
- Higher high (HH) — above the previous high
- Lower high (LH) — below the previous high
- Higher low (HL) — above the previous low
- Lower low (LL) — below the previous low
Note that the first high and first low in any sequence are left unlabelled, because there is nothing to compare them against. Labelling the first point is guessing rather than reading.
The second structural condition is alternation: high, low, high. Two consecutive highs mean a low between them was never identified, and any labelling built on that invents structure the reader never saw.
Why the swing is the unit, not the candle
Many readers start from candles, which are too small a unit to describe structure: a candle is an event on one timeframe, while a swing is a location several candles agreed on.
The practical effect: changing timeframe changes every candle, while major swing points stay roughly where they were. Structure is therefore more stable than candles across timeframes, which is what makes it a sound basis for multi-timeframe reading — see timeframe and candlestick patterns, where a candle is read inside structural context rather than alone.
Structure is a sequence of points, not an opinion
Market structure is a sequence of swing points: a high, then a low, then a high, then a low. Everything built on top — trend, range, breakout — describes how those points relate, rather than being separate from them.
One comparison rule never changes: each high is compared with the previous high, each low with the previous low. Comparing a high against the low before it is the most common error in structure reading and produces labels that look right and mean nothing.
This layer is methodology-neutral: a swing point was a swing point before any school of analysis existed and will be one after. Interpretations belonging to specific schools have their own pages, which say plainly that they are one reading rather than a market law.
A worked example
On gold: a low at 2,380, a high at 2,420, a low at 2,400, a high at 2,470, a low at 2,455, a high at 2,500.
Labelled by the same rule: the first two are unlabelled, then 2,400 is a higher low (above 2,380), 2,470 a higher high (above 2,420), 2,455 a higher low, and 2,500 a higher high.
The sequence is HL → HH → HL → HH, which is precisely the definition of an uptrend. Note what that gives you for free: the invalidation is known in advance at 2,455, the last higher low — an objective exit level fixed before anything happened rather than during the fall.
Common mistakes with this term
- Comparing a high with the preceding low instead of the previous high, producing labels that look right and mean nothing.
- Labelling the first point in a sequence, when there is nothing to compare it with and the label is a guess.
- Reading structure straight from candles, so it changes with timeframe while swing points stay roughly fixed.