Market Character is the big sister of Market Structure. While Market Structure can show the framework of price highs and lows, Market Character reveals the behaviour of price moves in greater detail.

Market character takes into account the speed of price movement, changing volatility, and the level of conviction behind the move.

The combination of Break of Market Structure (BOS) and Change in Market Character (CIMC) can form a powerful duo for reading price action with greater clarity and understanding. 

What is Market Character?

If market structure is about the price map over a period of time — indicating the formation of highs, lows, and swings — then market character is about the personality of price movement during the life of such a trend.

Two markets can look similar in structure but may have behaved very differently over the same time period.

One may have trended relatively smoothly with measured impulses to the upside and shallow retracements in price before trend continuation, whereas the other may be choppier in nature, hesitating regularly, with more frequent false breaks. 

This ‘how it moves’ is what we mean by character.

Key aspects of market character include:

• Momentum: Are moves strong and one-sided, or hesitant?
• Volatility: Are price ranges expanding or compressing?
• Reaction to levels: Do support and resistance break cleanly or have frequent and prolonged pauses?
• Consistency: Are breakouts following through or reversing and forming a series of false breakouts?
• Session tone: Are there relationships associated with different times of the trading day consistent with new session times? e.g., start of European or US sessions.

BOS and CIMC in Tandem

Break of Market Structure (BOS) occurs when the old pattern of swings is violated. For example, when an uptrend shows its first lower low. 

Change in Market Character (CIMC) is the confirmation that the way the market moves has shifted. For example, momentum may slow, volatility may show changes, or support/resistance breaches may be more/ less compelling in nature. 

A BOS without a change in character is often a false alarm. Whereas a BOS followed by a CIMC is a much stronger sign of a genuine shift.

Momentum Shifts

In a strong uptrend, price rallies are invariably strong, and pullbacks or price retracements are shallow. If rallies start weakening while retracements deepen or show a weaker recovery, momentum may be fading.

Why it matters: Weakening momentum makes trend continuation less reliable.

How to confirm: A flattening moving average slope or MACD histograms decreasing in size or signal line crosses over the histogram level (when in a long trade and vice versa for short), suggests that momentum is running out.

Volatility Regime Change

Markets alternate between calm, controlled moves and fast, wide swings. A sudden shift is a character change.

Why it matters: Stop placement and expectations must adapt to the current market normal; otherwise, trades may be prematurely closed due to increased market noise.

How to confirm: ATR rising shows volatility expansion; ATR falling shows compression. Using an ATR multiple for stop placement accounts for this volatility change. Bollinger Bands placed on your chart may offer another visual cue as the bands show narrowing or widening as volatility changes. 

Reaction to Key Levels

Markets that have previously rewarded breakout trades may start to reject new breakouts and snap back into a previous price range. They will then limp through the level (often with reduced volume), suggesting buying or selling pressure may not have the required levels to produce a sustained move. 

How to confirm: The number one sign of rejection is if a candle closes back in range (even if earlier in the candle showed potential promise). Volume is also a strong indicator. If volume is lacking or price fails to follow through on a single slightly higher volume bar, then character may have shifted.

Liquidity and Session Tone

Markets behave differently at different times of day. A shift aligned with session opening times is often a change in character as new information comes around these times, and a different set of traders enter the market.

Why it matters: The ‘best time to trade’ may change depending on the instruments and timeframe(s) you are trading, 

How to confirm: Session indicators or volume profiles can highlight which hours show the strongest moves. Measuring relative volume may be worth exploring, i.e., comparing the current volume with the standard profile for that day and time.

Final Thoughts

A Break of Market Structure (BOS) is your early warning that the pricing story may be changing. A Change in Market Character (CIMC) is confirmation that the behaviour has shifted, and a new set of opportunities could be developing.

Using both together can give clear clues as to whether those potential opportunities add weight to your thinking or are worth trading.

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