Advanced Market Structure: The Complete Guide to ICT and SMC – Part 10

#What Is Advanced Market Structure?

Market Structure describes how price organizes itself through highs, lows, expansions, retracements, and structural swings.

At a basic level, traders often define market structure through Higher Highs, Higher Lows, Lower Highs, and Lower Lows.

Advanced Market Structure goes further.

Not every high or low carries the same structural significance. To read price more precisely, we need to distinguish between:

• Short-Term Highs and Short-Term Lows

• Intermediate-Term Highs and Intermediate-Term Lows

This distinction helps determine which structural points are merely internal fluctuations and which ones may represent more significant objectives or protected levels.

Market Structure becomes meaningful when each swing is evaluated relative to neighboring swings, the active timeframe, and the current liquidity objective.

#What Are Swing Highs and Swing Lows?

A Swing High is a price high from which the market reacts lower.

A Swing Low is a price low from which the market reacts higher.

These points form the foundation of structural analysis.

However, identifying a Swing High or Swing Low alone does not tell us whether the point is structurally important.

Its significance depends on its relationship with surrounding swings.

#How Is a Swing Low Formed?

A Swing Low is a local low that stands out relative to the price action surrounding it.

However, every Swing Low should not automatically be treated as an important Intermediate-Term Low.

#How Is a Swing High Formed?

A Swing High is a local high followed by a bearish reaction.

Just like Swing Lows, the structural importance of a Swing High depends on the highs surrounding it.

#What Are STH and STL?

A Short-Term High (STH) is a locally significant high within the immediate price structure.

A Short-Term Low (STL) is a locally significant low within the immediate price structure.

These are among the smallest structural components used in this framework.

During a bearish move, price may form several STHs.

Likewise, during a bullish move, several STLs can form as price continues higher.

Not every STH or STL represents the final destination of price.

Many of these levels are simply internal structural points formed while the market is moving toward a larger objective.

#What Are ITH and ITL?

An Intermediate-Term High (ITH) is a more significant structural high formed relative to neighboring short-term highs.

An Intermediate-Term Low (ITL) is a more significant structural low formed relative to neighboring short-term lows.

They help traders identify more prominent points within the broader structure.

#How Do You Identify an ITL?

An Intermediate-Term Low can be identified using three neighboring Swing Lows.

The basic structure is:

1. Identify a central Swing Low.

2. The Swing Low to its left should be higher.

3. The Swing Low to its right should also be higher.

4. The central Swing Low is therefore the lowest point among the three.

The central Swing Low can therefore be classified as an Intermediate-Term Low (ITL).

#How Do You Identify an ITH?

The opposite logic applies to highs.

An Intermediate-Term High can form when:

1. The left Swing High is lower.

2. The central Swing High is higher.

3. The right Swing High is also lower.

The central high can therefore be classified as an Intermediate-Term High (ITH).

#What Is the Difference Between STH/STL and ITH/ITL?

The main difference is structural importance.

STHs and STLs describe smaller structural movements.

ITHs and ITLs represent more prominent structural points within a larger sequence.

A common mistake is treating every small high or low as a major structural level.

#Why Is Market Structure Fractal?

Market Structure is fractal, meaning similar structural patterns appear across different timeframes.

A point that appears to be a single STH on a Daily chart may contain multiple ITHs, ITLs, STHs, and STLs when viewed on a 15-minute or 5-minute chart.

For example, a Daily chart may display only one obvious Swing High.

When the same area is examined on a lower timeframe, it may contain:

• Multiple Swing Highs

• Multiple Swing Lows

• One or more ITHs

• One or more ITLs

This means structural labels should always be associated with a specific timeframe.

A 15-minute ITH is not automatically an ITH on the 1-hour chart.

Understanding this distinction prevents many common Market Structure errors.

#How Do Premium and Discount Relate to Market Structure?

Identifying swings alone is not enough.

You also need to understand where price is coming from and where it may be delivering toward.

Premium refers to the relatively higher portion of a dealing range.

Discount refers to the relatively lower portion of a dealing range.

These concepts help establish structural context.

Suppose price trades into a PD Array located in Premium and then begins moving lower.

A PD Array (Premium/Discount Array) is a price-delivery reference that can function as support, resistance, reaction point, or objective depending on context.

Instead of focusing only on the highs and lows being formed, ask:

Where is the next relevant Discount Array that price may be delivering toward?

That question helps establish the current Draw on Liquidity.

#What Role Does Draw on Liquidity Play in Market Structure?

Draw on Liquidity refers to the liquidity objective or price area that the market is expected to seek within the current scenario.

Market Structure becomes much more useful when the likely destination of price is understood.

Suppose price moves away from a Premium Array and an ITL below becomes the current liquidity objective.

The STHs created during that bearish movement can then become structurally relevant.

In a bearish scenario:

As long as the targeted ITL has not been reached, important STHs formed during the move may be expected to remain protected.

This relationship between structure and destination is one of the central ideas behind advanced Market Structure analysis.

#When Should a High Be Expected to Hold?

Consider a bearish scenario in which price reacts from a Premium Array.

The sequence may look like this:

1. Price reacts from a Premium Array.

2. An ITH forms.

3. A lower ITL becomes the Draw on Liquidity.

4. Several STHs form during the decline.

5. Those structural highs are expected to remain protected while price continues toward the ITL.

6. Once the ITL is reached, the structural context needs to be reassessed.

This framework helps distinguish between an ordinary retracement and a move that genuinely violates the expected structure.

#What Happens After Price Reaches an ITL?

This is an important part of Advanced Market Structure.

Once price reaches the targeted ITL, a structural objective has been completed.

At that point, smaller STHs formed during the previous bearish leg do not necessarily need to remain protected.

The probability of a deeper retracement may increase.

A Retracement is a temporary move against the prevailing directional leg.

That retracement may deliver price toward a higher-timeframe Premium Array.

The more important structural reference may then shift toward the relevant ITH.

A larger retracement after an ITL is reached does not automatically mean the entire market direction has reversed.

It may simply be normal price delivery inside a larger structure.

#A Simple Advanced Market Structure Example

Assume the market produces the following sequence:

• Price trades into a Fair Value Gap located in Premium.

• Liquidity around a previous high is taken.

• Price reacts lower.

• An ITH forms.

• A lower ITL becomes the Draw on Liquidity.

• Several STHs develop during the decline.

Within this scenario, the structural expectation is that bearish delivery can continue toward the ITL.

The STHs formed along the way may act as levels that price is expected to respect while the downside objective remains active.

Once the ITL is reached, the context changes.

A deeper retracement toward a higher Premium Array can now become possible.

For example, if the active structure is being analyzed on the 1-minute chart, the retracement may extend toward a 5-minute Fair Value Gap.

This is where the fractal nature of Market Structure becomes particularly important.

#How Does Fair Value Gap Relate to Market Structure?

A Fair Value Gap (FVG) is an area of price imbalance created when the market moves aggressively enough to leave inefficient delivery between candles.

An FVG can function as part of a PD Array and provide additional structural context.

For example, price may first sweep liquidity above a significant high, trade into a higher-timeframe FVG, and then react away from it.

However, an FVG should not be analyzed in isolation.

Its relevance becomes greater when you also know:

• Where liquidity is located

• Where the current ITH or ITL is

• Whether price is delivering from Premium toward Discount or vice versa

• What the active Draw on Liquidity is

A PD Array without structural context provides incomplete information.

#How to Analyze Advanced Market Structure Step by Step

#Step 1: Identify Swing Highs and Swing Lows

Begin by marking the most obvious swing points on the chart.

At this stage, you do not need to classify every point as an ITH or ITL.

#Step 2: Identify STHs and STLs

Evaluate the local swings and classify short-term structural highs and lows.

These points form the immediate structure of price.

#Step 3: Identify ITHs and ITLs

Compare groups of neighboring swings.

A central low surrounded by higher Swing Lows may qualify as an ITL.

A central high surrounded by lower Swing Highs may qualify as an ITH.

#Step 4: Define the Timeframe

Always know which timeframe your structural labels belong to.

This is essential because Market Structure is fractal.

#Step 5: Determine Premium and Discount

Evaluate where price currently sits within the relevant dealing range.

Also identify the PD Array from which price has reacted.

#Step 6: Identify the Draw on Liquidity

Before interpreting every structural break, determine the likely destination of price.

Ask:

Which Liquidity Pool or PD Array is price currently delivering toward?

#Step 7: Identify the Protected Structural Level

A Protected High or Protected Low is a structural point expected to remain intact while the current directional objective remains valid.

Determine which high or low should remain protected according to the current Draw on Liquidity.

#Step 8: Reassess the Structure After the Objective Is Reached

Do not continue applying the same structural expectation after the target has already been reached.

Once an ITH, ITL, or another relevant objective is taken, reassess the market.

A deeper retracement may now become valid.

#A Common Market Structure Mistake

One of the most common mistakes is treating every small structural break as a complete change in market direction.

Before making that conclusion, ask:

• Which timeframe does this swing belong to?

• Is it an STH/STL or an ITH/ITL?

• Where is the current Draw on Liquidity?

• Has the previous structural objective already been reached?

• Is price currently in Premium or Discount?

• Which PD Array is relevant?

• Which structural level is currently protected?

The violation of a small swing alone is not enough to define a meaningful structural shift.

#Why Does the Higher Timeframe Matter?

Assume an ITL has been reached on the 1-minute chart and a retracement begins.

Looking only at the 1-minute chart may not clearly reveal the destination of that retracement.

When you move to the 5-minute chart, you may identify a Fair Value Gap located in Premium.

The bullish movement on the 1-minute chart can then be interpreted as price delivering toward a higher-timeframe PD Array rather than an unexplained reversal.

The same relationship can exist between:

• 1-minute and 5-minute charts

• 5-minute and 15-minute charts

• 15-minute and 1-hour charts

• 1-hour and 4-hour charts

Market Structure should always be interpreted within higher-timeframe context.

#Market Structure Should Not Be Analyzed in Isolation

Advanced Market Structure is not a standalone system separated from other ICT and SMC concepts.

Its usefulness increases when combined with:

• Swing Highs and Swing Lows

• Fair Value Gaps

• Order Blocks

• PD Arrays

• Liquidity

• Draw on Liquidity

• Premium and Discount

• FLOD and LLOD

The First Line of Defense (FLOD) represents the first important defensive area within a price-delivery model.

The Last Line of Defense (LLOD) represents the final significant defensive area before the structural premise is more seriously challenged.

These concepts can be combined with Market Structure to provide additional context.

The value of Market Structure comes from its relationship with liquidity and price-delivery arrays, not from simply labeling large numbers of highs and lows.

#Advanced Market Structure Summary

Advanced Market Structure in ICT and SMC is built around the relationship between Swing Highs and Swing Lows.

STHs and STLs describe shorter-term structure, while ITHs and ITLs identify more prominent structural points.

These levels should never be analyzed without context.

Premium and Discount, PD Arrays, Draw on Liquidity, and the active timeframe all help determine which structural level should remain protected and which level may become the next objective.

The key principle is simple: identify the likely destination of price first, then analyze the structure between the origin and that destination.

#Key Takeaways

• Market Structure is built from relationships between Swing Highs and Swing Lows.

• Not every swing carries the same structural importance.

• STH and STL describe short-term structure.

• ITH and ITL represent more significant structural points.

• Market Structure is fractal.

• An ITH or ITL should always be associated with a timeframe.

• Premium and Discount establish directional context.

• Draw on Liquidity helps define the expected destination of price.

• Structural swings may remain protected while the active objective remains unresolved.

• Once an ITH or ITL objective is reached, a deeper retracement may become valid.

• FVGs and other PD Arrays should be analyzed together with structure and liquidity.

• Market Structure is probabilistic and does not provide certainty.

#Frequently Asked Questions

#What is Advanced Market Structure in ICT and SMC?

Advanced Market Structure is a framework for analyzing the relationship between Swing Highs, Swing Lows, STHs, STLs, ITHs, and ITLs together with Premium, Discount, PD Arrays, and Draw on Liquidity.

#What is the difference between an STH and an ITH?

An STH is a Short-Term High within local price structure. An ITH is a more prominent Intermediate-Term High that has greater structural significance relative to surrounding highs.

#What is the difference between an STL and an ITL?

An STL is a Short-Term Low within local structure. An ITL is a more significant low positioned below neighboring Swing Lows within the relevant structural sequence.

#Are ITH and ITL the same on every timeframe?

No. Market Structure is fractal. A level classified as an ITH on a 15-minute chart may represent only a smaller internal swing on the 1-hour chart.

#What is Draw on Liquidity?

Draw on Liquidity is the liquidity objective or price area that the market is expected to seek within the current price-delivery scenario.

#Why are Premium and Discount important in Market Structure?

Premium and Discount help determine where price is located within the relevant dealing range and provide context for potential delivery between opposing PD Arrays.

#Does every broken Swing High or Swing Low signal a market structure shift?

No. The structural importance of the swing, its timeframe, the current Draw on Liquidity, and the broader price-delivery context must all be considered.

#What can happen after price reaches an ITL?

After the targeted ITL has been reached, a deeper retracement may become valid. Structural focus can then shift from smaller STHs toward a more significant ITH or higher-timeframe PD Array.

#Final Answer

Advanced Market Structure in ICT and SMC is analyzed by identifying Swing Highs and Swing Lows, classifying them into STH/STL and ITH/ITL, establishing Premium and Discount context, identifying the active Draw on Liquidity, and evaluating the structure across multiple timeframes.

Instead of reacting to every broken high or low, traders should determine where price originated, which PD Array it reacted from, where liquidity is likely drawing price, and which structural swing should remain protected during that delivery.

This transforms Market Structure from a simple Higher High/Lower Low model into a framework for understanding how price is delivered from one objective to another.