Change of Character (CHOCH): The First Sign of a Market Reversal
Change of Character (CHOCH): The First Sign of a Market Reversal Introduction A Change of Character (CHOCH) is one of the earliest signals that a market trend may be changing. Unlike a Break of Structure (BOS), which confirms trend continuation, CHOCH suggests that buyers or sellers are beginning to lose control. Professional traders use CHOCH as an early warning, not as an automatic entry signal. What Is CHOCH? CHOCH occurs when price breaks a key swing point that defines the current trend. For example: During an uptrend, price fails to make a new Higher High and breaks below the previous Higher Low. During a downtrend, price fails to make a new Lower Low and breaks above the previous Lower High. This change in market behaviour may indicate that the existing trend is weakening. Bullish CHOCH A Bullish CHOCH may appear when: The market has been in a downtrend. Price breaks above the previous Lower High. Selling pressure weakens. Buyers begin taking control. This suggests that a bullish...