Smart Money Concepts 1 / 5
Smart Money Concepts · Level 4Lesson 1 of 4

Break of structure and change of character (BOS and ChoCH)

Smart Money Concepts starts where the trend lesson ended: swing highs and lows. A close through one of them gets a name — and a promise that is easy to check.

You will learn
  • What BOS and ChoCH mean, and the exact rule behind them
  • Why the same chart can show five breaks in two weeks
  • How often BTC kept going after a break, compared with any candle

Before you start: The lesson on trend and market structure.

A close through a swing

Smart Money Concepts (SMC) is a vocabulary for price charts that spread through online trading courses: breaks of structure, liquidity, order blocks, fair value gaps. It has no single official definition — every course and indicator draws the lines a little differently. This module uses the exact rules of the terminal, so what you learn here is what you see there.

Both terms are about a candle that closes through the last swing:

  • Break of structure (BOS) — a close through the last swing in the direction of the trend: above the last swing high in an uptrend, below the last swing low in a downtrend. By this rule, the trend goes on.
  • Change of character (ChoCH) — the first close through the swing on the other side: below the last swing low in an uptrend, or above the last swing high in a downtrend. By this rule, the trend has turned.

The terminal counts a break only when the close is beyond the swing by more than 0.3 × the average true range (ATR) of the last 14 candles, so that a close a few dollars through a level does not count. It also does not count a second BOS at almost the same level (within 1 ATR of the last broken one). A wick through the swing with the close back inside is not a break at all; it is a sweep — the next lesson.

One difference to know: the terminal measures with the ATR of the latest candle, while these lessons use the ATR at each candle of the past. On the terminal's chart, an old break that only just passed the 0.3 ATR test can therefore be labelled differently.

Breaks — BTC on 4-hour candles, 3 to 22 September 2026. At 08:00 UTC on 8 September a candle closed at 78,430, below the swing low of 78,660: a ChoCH down. At 12:00 UTC on 10 September a BOS down below 77,620, and at 20:00 UTC on 15 September another below 76,389 — after which price closed back above the level within two days. At 12:00 UTC on 18 September a ChoCH up above 79,600, and at 08:00 UTC on 21 September a BOS up above 81,951; later that day BTC traded at 87,396.

What a break promises — and what the data shows

Courses present a BOS as confirmation that the trend continues, and a ChoCH as the moment it turns. Both are easy to test: take every break the rule finds, and see whether price was further in the break's direction 12 candles later. Then compare with how often that happens after any candle.

Check the claim — on BTC/USDT 4-hour candles (28 October 2025 – 27 October 2026), price was further in the break's direction 12 candles later after 17 of 37 BOS (46%) and 14 of 27 ChoCH (52%); after any candle, about 50%. Daily candles (2024 – October 2026): 5 of 15 BOS (33%) and 13 of 21 ChoCH (62%). Hourly candles (June – October 2026): 27 of 57 BOS (47%) and 34 of 69 ChoCH (49%).

On the 4-hour and hourly charts, a break was followed by more of the same about as often as a coin lands heads. The daily numbers swing further, but they rest on 15 and 21 cases: two cases more or fewer would move them by 10 to 13 points.

Check yourself · 1 of 3In an uptrend, a 4-hour candle closes well below the last swing low. What is it?
Show the answer

A close through the swing on the other side of the trend is a change of character.

Check yourself · 2 of 3A candle's wick goes above the last swing high, but it closes back below. Is it a BOS?
Show the answer

The terminal needs the close beyond the swing by more than 0.3 ATR. A wick that comes back is a sweep.

Check yourself · 3 of 3On BTC's 4-hour chart, how often was price further in the break's direction 12 candles after a BOS?
Show the answer

17 of 37 BOS (46%) — close to the 50% of any candle.

Takeaways
  1. BOS: a close through the last swing with the trend; ChoCH: the first close through the swing against it.
  2. The terminal needs a close beyond the swing by more than 0.3 ATR; a wick is not enough.
  3. SMC has no single official definition; this course uses the terminal's rules.
  4. On BTC's 4-hour and hourly charts, price continued after a break about as often as after any candle.

Open BTC in the terminal — BOS and ChoCH are under the layer-group button above the chart

Further reading

Education only, not financial advice · Updated 28 Oct 2026 · Data: Binance · Report a mistake