Choch Meaning in Trading Forex | Change of Character

June 24, 2023

Choch Meaning in Trading Forex | Change of Character

In this smart money concept forex video lesson, I will be sharing the choch meaning in trading forex and how we use these change of character signals as a “reversal trading strategy” to make profits before the majority of other traders.

👨🏽‍💻 Discussion Topic ✍🏼

“Is CHOCH a safe signal of a trend reversal?” 👇



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Understanding Chochs: A Key Indicator for Directional Changes

I want to delve into the fascinating concept of chochs and how they can be a valuable tool for predicting changes in price direction. It’s important to note that chochs serve as early indicators rather than definitive confirmations, unlike what we saw in the fractal section. So, let’s dive in and explore this intriguing concept together.

When we talk about chochs, we are referring to a change of direction in price movement. As price continues its journey and forms fractal structures, there comes a point when it completes a move and potentially starts shifting its trajectory. The choch acts as the first signal that alerts us to this change.

In a bullish trend, a choch occurs when the nearest low is broken. Similarly, in a bearish trend, it happens when a high is broken. Think of it as a change in wind speed. Just as changing wind speed can indicate an approaching rainstorm, a choch signifies a potential shift in price direction. However, it’s important to remember that a choch alone isn’t enough to make a trading decision; we need additional confirmation to strengthen our bias.

It’s crucial to understand that chochs can appear in both the right and wrong places on the charts. To enhance the accuracy of our analysis, we should focus on identifying chochs at high probability points of interest. In upcoming lessons, we’ll explore techniques for spotting these significant areas.

Now, let’s put theory into practice. In this video, I’ll walk you through a practical exercise to help you grasp the concept of chochs. We’ll be applying this knowledge across different time frames, from 15 minutes for analysis to 1 minute for entries. So, let’s get started with the practice session!

First, let’s revisit fractal breaks. Remember, we don’t need a candle body close for a fractal break; a wick is sufficient. Whenever a candle fails to break below the next candle by even a single micro pip, we have a fractal structure. Now, let’s observe a real-time example using bar replay.

As we analyze the chart, pay attention to the candle movements. The first candle breaks above the next one, and the second candle does the same. Since there is no fractal structure here yet, the pattern continues. However, sometimes, a candle may break above the previous one, even in a bearish move. In such cases, the upward trajectory may persist without forming a fractal structure.

After several candles, we finally observe a break. The subsequent candle fails to break above its predecessor, indicating a potential fractal structure. This becomes our most recent low for the choch. Remember, a choch is just a signal that price might pull back; it doesn’t guarantee it will happen. However, it serves as a valuable indication for our analysis.

Moving forward, it’s important to note that chochs can occur in both the wrong and right places. Hence, we must focus on high probability points of interest to increase our trading success. These are the areas where price is likely to undergo significant changes.

Throughout the video, we explore various examples of chochs, observing how price moves after these directional changes. We witness pullbacks, breaks, and potential continuations. It’s crucial to understand the context and volatility of the market to interpret these movements accurately.

As we conclude this blog post, I hope you have gained a solid understanding of chochs and their significance in predicting directional changes in price. Remember, you’ll encounter different types of market structures as you start trading, and chochs can help you navigate through these complexities.

If you have any questions or need further clarification, feel free to reach out to me.