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Module 3

Key Levels & Market Structure

Learn to identify and trade significant support and resistance levels that actually matter in trading.

Higher Timeframe Analysis

The goal of higher timeframe analysis is to give every intraday decision a macro anchor. Daily, weekly, and monthly charts define the "playing field" where intraday moves unfold.

Why start high → go low

  • •Higher timeframes create the dominant bias (bullish, bearish, or balanced).
  • •Their levels are heavier—they attract more orders and hold influence longer.
  • •Intraday chop becomes easier to ignore when it's moving within a higher-timeframe range.

What to mark (clean, consistent, repeatable)

  • •Previous Day/Week/Month High & Low: PDH/PDL, PWH/PWL, PMH/PML.
  • •Opens & Closes: PWO/PWC (prev week open/close), PMO/PMC (prev month open/close). Current week open (WO) and month open (MO) are also key reference lines.
  • •Current Session Range: Asian, London, and New York session highs/lows.
  • •Major Swing Points: The most recent clear swing high/low on D/W/M.

How to keep it clean

  • •Limit yourself to 2–3 meaningful levels per timeframe; quality over clutter.
  • •Prefer wick extremes for highs/lows; use opens/closes for reference opens/closes.
  • •Prioritize fresh (recently formed) and untested levels; stale levels lose potency.

Single-Candle Mindset

Imagine you can only trade today's daily candle. Let the wick form at or through a key level (sweep/test), then look for the body to expand away from that level. This keeps you patient early, aligned mid-session, and realistic about late-session fade.

Identifying Key Levels

Key levels aren't lines you "eyeball." They're objective reference points where liquidity concentrates and decisions get made.

Core set you should always know

  • •Session High/Low: Asian (sets the overnight range), London (often drives the initial break/false break), New York (tends to confirm or reverse).
  • •Prior Period Extremes: PDH/PDL, PWH/PWL, PMH/PML—classic liquidity pools.
  • •Opens/Closes: PWO/PWC, PMO/PMC, and current week/month opens—used by many desks to judge who's "in control" on the period.
  • •Round Numbers: 50s/00s and product-specific big handles (e.g., NQ 23,500 / 24,000).
  • •Recent Swing High/Low: The most obvious pivot visible to the crowd.

Marking rules

  • •Draw horizontals precisely at the wick extreme (for H/L) or at the exact open/close (for O/C).
  • •Don't stack ten lines in a 0.25% band. If levels cluster, treat the cluster as a zone.
  • •Update once per day: roll yesterday's PDH/PDL forward; keep only the most relevant weekly/monthly references.

What the labels mean (as seen on your chart)

PWH / PWL – Previous Week High/Low

PMH / PML – Previous Month High/Low

PWO / PWC – Previous Week Open/Close

PMO / PMC – Previous Month Open/Close

WO / MO – Current Week/Month Open

Market Structure Basics

Market structure explains how price moves between your key levels.

Three states

Uptrend: Higher Highs (HH) and Higher Lows (HL). Pullbacks into levels often hold.

Downtrend: Lower Highs (LH) and Lower Lows (LL). Rallies into levels often fail.

Range: Equal Highs/Lows (EQH/EQL). Expect false breaks and mean reversion.

Two critical shifts

BOS (Break of Structure): The trend continues—fresh HH in an uptrend or LL in a downtrend.

CHOCH (Change of Character): A first meaningful break against the prevailing trend—early warning of a potential reversal or range formation.

Liquidity behavior at levels

  • •Sweep → Rejection → Shift: A common sequence. Price wicks through PDH/PWH to run stops (liquidity grab), rejects, then puts in a CHOCH. That's often the real entry context.
  • •Respect without sweep: Strong trends often tap a level and continue. No sweep needed.

Tie-back to the single-candle model

On a daily candle, the wick is the sweep/test; the body is the directional expansion. Intraday, you're just trading how that wick and body get built.

Level Confluence Techniques

Confluence is stacking independent reasons to act at the same place. One line is a hint; three aligned factors make a plan.

Common confluence stacks

  • •Prior Period Extreme + Session Level: e.g., PWH overlapping with London High.
  • •Reference Open + Round Number: e.g., PMO sits near a big handle—watch the reaction.
  • •Key Level + Trend Filter: Level reaction in the direction of the 200 EMA / higher-TF bias.
  • •Level + Structure Shift: Sweep of PDH → rejection wick → CHOCH/BOS on execution timeframe.

Simple scoring idea

Start at 0; add +1 for each: HTF level, session level, round number, trend filter aligned, structure signal (CHOCH/BOS), clean reaction candle.

Trades with 3–4 points are A-setups; 1–2 points are pass or size down.

Execution blueprint

  1. 1.HTF map: Bias from D/W; mark PDH/PDL, PWH/PWL, PMH/PML, PMO/PMC, session ranges.
  2. 2.Wait for interaction: Sweep or clean touch of a pre-planned level.
  3. 3.Demand a signal: Rejection wick/engulf + CHOCH/BOS in your direction.
  4. 4.Place risk at the level that invalidates the idea, not at an arbitrary tick.
  5. 5.Manage by structure: Partial at the next mapped level; trail below/above last swing.

What to avoid

  • •Drawing levels from random intra-bar noise.
  • •Trading the first touch of every line without a reaction or structure cue.
  • •Ignoring time of day—session opens often create sweeps; late session often compresses.
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