Structure in depth: swings that matter
- Separate major swings from noise
- Read structure on two timeframes at once
- Know which low a trend must hold
Not every wiggle is a swing
The same chart can be read with tiny swings (every 2-candle dip) or large ones (only the moves that changed the picture). Traders who mix the two talk past each other. Pick a rule and keep it: in NexusCore a swing needs 5 candles on each side; use a higher timeframe when you want bigger swings, rather than loosening the rule.
External and internal structure
The external (major) structure is the sequence of swing highs and lows on your direction timeframe. Inside each leg there is internal structure: smaller swings on the lower timeframe. A pullback in a 4H uptrend is a 15-minute downtrend — internal structure against external structure.
Trading in the direction of the external structure, entering when the internal structure turns back with it, is the core of trend-following.
The low that matters
In an uptrend, the protected low is the swing low that started the last move to a new high. As long as price stays above it, the uptrend is intact. Stops for longs go below it; a close below it is the first sign the trend is over.
Check yourself
1. A 4H uptrend pulls back and the 15m chart makes lower highs. This 15m structure is…
- External structure
- Internal structure against the bigger trend ✓
- A reversal of the 4H trend
2. Where does a trend-following long's stop belong?
- 1% below entry
- Below the protected swing low ✓
- At the last candle's low, always
Terms in this lesson
- External / internal structure
- Major swings on the direction timeframe vs the smaller swings inside a leg.
- Protected low
- The swing low that started the latest new high; an uptrend must hold it.