The Market Structure Shift (MSS) in ICT style signifies initial price movements that can lead to a trend reversal or a change in market direction.
This concept is often associated with a sudden break of key levels and an aggressive price displacement move, which plays a crucial role in different trading setups.
Introduction to Market Structure Shift (MSS) in ICT
In various market trends, the formation of MSS often results in the halt of the current trend, price direction change, and the establishment of a new short-term trend. In some cases, this event serves as an early indication of a long-term trend reversal.
Importance of Understanding Market Structure Shift (MSS)
Correct identification of this concept enables traders to determine optimal entry points to capitalize on the new trend. Applications of MSS in technical analysis:
- Early detection of trend reversals
- Optimized entry points and stop-loss placement
- Connection with major market liquidity to prevent stop hunts
- Integration with other trading setups
Key Features of MSS
To correctly identify Market Structure Shift, traders should recognize its core features:
- Break of the last swing high or last swing low abruptly
- Accompanied by an aggressive price displacement move
- Typically occurs after liquidity grabs or stop hunts
Signs of Market Structure Shift (MSS) Formation
MSS in ICT occurs when the last swing high or last swing low is broken, coupled with an aggressive price displacement move.
Swing High
A Swing High is a point where the price halts after an upward movement and begins to decline. It typically represents a temporary resistance levelat the peak of an uptrend.
Swing Low
A Swing Low is a point where the price stops declining and starts to rise. It often marks a temporary support level at the bottom of a downtrend.
Displacement Move
A Displacement Move refers to a sudden and forceful price shift. In the ICT style, this move signifies the inflow of significant liquidity into the market.
One of the primary confirmation signals for MSS is the break of the last key swing high or low via a strong displacement move.
Trading Guide Based on Market Structure Shift (MSS)
Trading with MSS consists of three main steps:
#1 Determining ICT Daily Bias
By analyzing the Daily (D1) and H4 timeframes, swing highs, swing lows, and liquidity points, traders can identify the daily bias.
#2 Identifying MSS in Lower Timeframes (M5, M15)
The identification of MSS differs between bullish and bearish trends, which can be observed in the MSS completion zones:
- Bullish Trend: MSS is confirmed when a Swing Low is broken with an aggressive displacement move;
Market Structure Shift is confirmed by breaking swing lows with a displacement move - Bearish Trend: MSS is confirmed when a Swing High is broken with an aggressive displacement move;
Market Structure Shift is confirmed by breaking swing high with a displacement move
#3 Confirmation for Trade Entry
Trade entry confirmations based on MSS can be derived from three key methods:
- Entry after testing the last valid Order Block post-MSS
- Entry after filling the Fair Value Gap (FVG)
- Entry after confirmation of a Liquidity Grab
Comparison of MSS with Regular Trend Reversals
A trend reversal typically occurs when the pattern of higher highs and higher lows (HH & HL) in an uptrend—or lower highs and lower lows (LH & LL) in a downtrend—gradually shifts, signaling the start of a new trend.
However, MSS occurs suddenly and is accompanied by a strong displacement move, often signaling liquidity manipulation. The table below compares MSS and traditional trend changes:
Parameter | Market Structure Shift (MSS) | Regular Trend Change |
Speed of Change | Sudden and aggressive | Gradual with price corrections |
Break of Range | Breaks Swing Low or Swing High | Gradual shift in price structure |
Main Characteristic | Accompanied by aggressive displacement | Occurs gradually with pullbacks |
Liquidity and Market Manipulation | Often follows liquidity grabs and stop hunts | Primarily due to supply and demand imbalances |
Preferred Timeframes | Lower timeframes (LTF) | Higher timeframes (HTF) |
Trading Style | Short-term trades | Mid-term trades |
Combining MSS with Other ICT Concepts
One of the key advantages of MSS is its flexibility in integrating with other ICT concepts.
Using MSS with Liquidity Pools
Liquidity Pools are areas in the market where many stop-loss orders and pending orders accumulate, providing significant liquidity.
When price absorbs liquidity from a liquidity pool, the validity of MSS increases.
Example of Integrating MSS with Liquidity Pools
For instance, sellers place their stop-loss orders above swing highs in a bullish trend, creating a liquidity pool. When the price enters the liquidity pool, activating pending orders, liquidity is injected into the market.
After accumulating sufficient liquidity, the price breaks the last valid low, confirming MSS.
Combining MSS with Fair Value Gaps (FVG)
A Fair Value Gap (FVG) is a gap that forms between the first and third candlesticks in a sequence of three, with a noticeable space between the close of the first candle and the open of the third.
When a Market Structure Shift (MSS) occurs after the break of a swing high or low, it may be followed by the formation of a Fair Value Gap (FVG), providing further confirmation of the trend shift.
Example of MSS & FVG Integration
When MSS forms within an uptrend along with an FVG, the price will likely retrace into the FVG zone before continuing the new trend. Placing an entry order within the FVG zone provides an optimal trade entry point.
Conclusion
The Market Structure Shift (MSS) is a key concept in ICT trading methodology. It represents a sudden shift in market direction.
This shift occurs when a swing low or swing high is broken with an aggressive price displacement move, often signaling liquidity manipulation and potential trend reversals.
