Some of you may have been faked out when trying to trade a reversal because you picked the wrong level to qualify as a Change of Character.
The picture is a bearish reversal example of a CHoCH (you can reverse this for a bullish CHoCH reversal).
The CHoCH doesn’t occur when the last higher low is violated.
The CHoCH occurs when the last valid higher low is violated.
This is an important distinction and is based on the rules of market structure.
A higher low is validated when it leads to a higher high.
A lower high is validated when it leads to a lower low.
In both a Break of Structure (BOS) or CHoCH, the market range is being broken out of. When price breaks out of the market range for a continuation it is a BOS, when it breaks out of the market range for a reversal it is a CHoCH.