📈 Understanding Market Structure: External vs. Internal
What is External Structure?
External structure reveals the market's primary direction (up or down). It's the "big trend."
After a Break of Structure (BOS):
Draw the Valid Zone: At the swing high/low where the BOS-causing move started.
Mark the Start of Pullback: Where price begins to retrace after the BOS.
Together, these form the External Structure.
What is Internal Structure?
Internal structure consists of all the smaller price movements that occur:
Between the Valid Zone and the Start of the Pullback.
These are not the main structure but smaller moves within the larger external trend.
How to Find External Structure the Right Way
❗️ Don’t just start at the current price. Always go back and find a clear BOS from the past.
🔍 Step-by-Step:
-
Go back to the past and find an obvious Break of Structure (BOS) — not a confusing one.
-
From that BOS:
- Draw the Valid Zone at the swing where the move started.
- Mark the new swing where the pullback begins.
- These two points form your external structure.
-
Now, move forward slowly as the market develops:
- Watch the structure change.
- Adjust the BOS, valid zone, and new swing as price forms new structure.
What to Avoid
Don’t start from the current price without checking the past.
If you do, you might use internal structure by mistake — and that can lead to wrong trades.
Quick Summary Table
Term
Meaning
Valid Zone
Where the move that broke structure started
Start of Pullback
Where price starts retracing after the BOS
External Structure
The main move: valid zone to start of pullback
Internal Structure
All small price movements between the valid zone and pullback start
🎯 Final Tip:
“Start from a strong BOS in the past, draw the structure, and move forward slowly — structure builds as the market moves.”
What is External Structure?
External structure reveals the market's primary direction (up or down). It's the "big trend."
What is Internal Structure?
Internal structure consists of all the smaller price movements that occur:
These are not the main structure but smaller moves within the larger external trend.
How to Find External Structure the Right Way
❗️ Don’t just start at the current price. Always go back and find a clear BOS from the past.
🔍 Step-by-Step:
- Go back to the past and find an obvious Break of Structure (BOS) — not a confusing one.
-
From that BOS:
- Draw the Valid Zone at the swing where the move started.
- Mark the new swing where the pullback begins.
- These two points form your external structure.
-
Now, move forward slowly as the market develops:
- Watch the structure change.
- Adjust the BOS, valid zone, and new swing as price forms new structure.
What to Avoid
If you do, you might use internal structure by mistake — and that can lead to wrong trades.
Quick Summary Table
| Term | Meaning |
|---|---|
| Valid Zone | Where the move that broke structure started |
| Start of Pullback | Where price starts retracing after the BOS |
| External Structure | The main move: valid zone to start of pullback |
| Internal Structure | All small price movements between the valid zone and pullback start |
“Start from a strong BOS in the past, draw the structure, and move forward slowly — structure builds as the market moves.”