Stock Trading for Beginners

Has the Market Bottomed? (BOS vs CHOCH Explained)

Tyler Stokes Season 4 Episode 14

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0:00 | 11:46

Welcome to season 4, episode 14 of the Stock Trading for Beginners Podcast!

In this episode, we break down two core concepts in technical analysis — Break of Structure (BOS) and Change of Character (CHOCH).

These are simple ideas, but they play a major role in helping you understand whether a trend is continuing or starting to reverse.

Given the current market conditions, this is especially important. We’ve been in a downtrend for months, and many traders are now asking: have we bottomed, or is there more downside?

Understanding these concepts can help you read charts with more clarity and confidence.


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One of the biggest challenges for beginner traders is not knowing how to read market structure.

They see price moving, but they don’t have a clear framework to understand what the chart is actually telling them.

This episode simplifies that process by focusing on how trends form, how they continue, and how they potentially change.


What We Cover:


Market Structure Basics

Every chart is built on four simple ideas:

  • Higher Highs (HH)
  • Higher Lows (HL)
  • Lower Highs (LH)
  • Lower Lows (LL)

An uptrend is a series of higher highs and higher lows.

A downtrend is a series of lower highs and lower lows.

Once you understand this, everything else becomes easier.


What a Break of Structure (BOS) Means

A Break of Structure happens when price breaks a previous level in the direction of the trend.

In an uptrend, this means breaking above a previous high.

In a downtrend, it means breaking below a previous low.

This signals continuation — the trend is still intact and momentum is still strong.


What a Change of Character (CHOCH) Signals

A Change of Character is the first sign that a trend might be weakening.

It happens when price breaks structure in the opposite direction of the current trend.

For example, in a downtrend, if price breaks above a lower high, that’s a CHOCH.

It doesn’t guarantee a reversal, but it’s an early warning that something may be changing.


How BOS and CHOCH Work Together

The real value comes from combining these two concepts.

A typical reversal may look like this:

  • A stock is in a downtrend
  • Price breaks above a lower high (CHOCH)
  • Price pulls back and forms a higher low
  • Price breaks higher again (BOS)

This sequence provides stronger confirmation that the trend is shifting from bearish to bullish.


Why This Matters Right Now

With the market recently holding support, many charts are starting to show early signs of potential trend changes.

Seeing a CHOCH followed by a BOS can help build confidence that a bottom may be forming.

This allows for more structured and less emotional entries.


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