Complete Market Structure: Order Flow and Multiple TimeframesUSD/JPYOANDA:USDJPYThe_Forex_StewardUnderstanding Market Structure: A Simplified Breakdown Market structure can seem complex at first glance. But when you break it down piece by piece, it becomes much simpler to understand. At its core, price action is a visual representation of human emotion and logistic balance. It’s both calculated and unpredictable. To truly grasp price action, we must begin by understanding the foundations of the market. 1. Sentiment In the beginning, there was just a single bar — whether on the 1-minute, 1-hour, 1-day, or 1-week chart. That one bar only had one defining trait: direction. At this early point, there was no trend, no supply or demand zones — only bullish or bearish sentiment. Over time, as more bars formed, sentiment shifted. What was once bullish became bearish, or vice versa. This shift gave rise to a new phenomenon: engulfment. 2. Engulfment An engulfment occurs when one candle overtakes the previous one, signifying a strong shift in sentiment. When this happened for the first time, it created what we now call an order block around the engulfed candle. The engulfment generated a gap, which led to an imbalance in the market. Naturally, price tends to return to fill this gap to regain balance. Often, price will later engulf back in the original direction, continuing the cycle. 3. Order Flow / Sequence As more bars appeared, patterns began to form. Series of bullish bars created bullish order flow, and bearish sequences formed bearish order flow. These sequences, when viewed on higher timeframes, appeared as single candles. As these larger candles began to engulf each other, it triggered a new surface-level event: bullish sequences began overtaking bearish ones, and vice versa. This is what I call internal shifting. 4. Internal Shifting Through internal shifting — where sequences start overtaking each other — the chart begins to display more defined highs and lows. These fluctuations deepen as order flow keeps switching back and forth. Eventually, the structure is no longer just internal. Highs and lows start breaking, and broader, more visible structures form. 5. Highs, Lows, and Breaks of Structure (BoS) As this cycle continues, the external structure of a timeframe emerges. Highs get higher, then lower, and this alternation continues. The result is a zigzag pattern — the hallmark of market structure. But this structure is not random. It’s the collective output of sentiment shifts, engulfments, sequences, internal shifts, and breaks of structure, all working together to create the full picture. 6. Multi-Timeframe Principles In simple terms, the external structure of a smaller timeframe is just a more detailed (fractal) version of its higher timeframe. Likewise, the internal structure of a given timeframe is the external structure of its lower timeframe. This creates multiple perspectives of the same phenomena, depending on scale. 7. Same Concepts, Different Scales What’s called an order block on a higher timeframe may be known as a supply or demand zone on a lower timeframe. An engulfment on a higher timeframe can appear as a sequential engulfment on a lower one. An internal shift on a lower timeframe might just be a pullback when viewed from above. If you go two timeframes apart — say, from low to medium to high — you’ll notice even more complexity. For instance, a higher timeframe order block becomes a premium/discount zone in the lowest of those three timeframes. 8. Low, Medium, and High Timeframes: The Complete Picture By analyzing the market using three timeframes in unison, you can establish a complete view of market structure. When you truly understand this approach, trading becomes more strategic. Your setups gain better risk-to-reward ratios, and consistent profitability becomes more achievable. Market structure is both logically and emotionally driven — simple, yet intricate. And while we’ve covered the logical side, the emotional side lies in trading psychology — a topic I’ll be exploring in detail next. Want to apply this concept using indicators? I've developed custom indicators that reflect the principles explained above. If you'd like to see how this theory works in practice, check out my TradingView page: The_Forex_Steward, where you can access these tools.