Change Of Character (Choch) in Forex Trading: Complete Guide

Choch or change of character is the phenomena in the FX or Crypto market that most traders use to capture the reversal of price and to predict the change in sentiment of the market from bullish to bearish and vice versa.

This guide will delve into Change of Character (CoC) in the forex, and crypto market, covering its fundamentals, methods for identifying shifts in character, real-world examples, appropriate time frames for detecting valid changes, and strategic consideration.

What is Choch( Change of Character) in Forex?

Table of Contents

Chcoh is the change in trend or change in the sentiment of the market from bullish to bearish and bearish to bullish. Change Of Character occurs when the price fails to make a new lower low( in a bearish market) and higher high (in a bullish market).

This concept is used by forex and crypto traders to capture reversal.

How to identify choices in Forex

Identifying a Change of Character (CoC) in Forex or Crypto Markets

Top-Down Approach for Identifying Change in Trend

To effectively identify Choch, a top-down approach is essential. This involves starting with higher time frames and gradually moving to lower time frames for more granular analysis.

Step 1: Identify Potential Points of Interest (POIs) on Higher Time Frames

Begin by examining higher time frame charts, such as daily or weekly charts, to pinpoint potential POIs. These POIs can be:

Order Blocks: Areas where large orders have been placed, indicating potential support or resistance levels.

Liquidity Pools: Areas where significant price action has occurred, suggesting potential areas of liquidity imbalance.

Support and Resistance Areas: Zones that have consistently repelled or attracted price, indicating potential turning points.

Step 2: Analyze Price Action at POIs on Lower Time Frames

Once you’ve identified potential POIs on higher time frames, switch to lower time frames, such as 4-hour or 1-hour charts. Observe price action around these POIs to detect a change in trend.

Signs of a Valid Change of Character

Failure to Break Previous Highs or Lows: Price failing to surpass recent highs or lows can signal a reversal.
Engulfing Candlestick Patterns: These patterns suggest a change in momentum, with the current candle engulfing the previous one.
Divergences: Discrepancies between price action and momentum indicators, such as RSI or MACD, can hint at a trend reversal.

Change of Character(Choch) Example

EURUSD Chart

Price taping into the point of interest shows a change in character.

Price Taping into the Point of Interest (POI) Signals a Change in Character in the above EURUSD Chart.

Let’s see another example of a change of character in the USDJPY pair.

The strategy of Trading Choch

1. Identify Key Points of Interest (POIs) on a Higher Time Frame (HTF):

Begin by examining higher time frame charts, such as daily or weekly charts, to pinpoint potential POIs. These POIs can serve as valuable indicators of potential support or resistance levels.

2. Patiently Await Price Action:

3. Transition to a Lower Time Frame (LTF):

Upon price reaching the identified POI, switch to a lower time frame, such as a 15-mint or 5-mint on the chart.

4. Make Entry on FVG Basis

5 Only Trade in Specific Time Zones

Trading 24 hours 5 days is not recomended only trade on the opening or closing of the London, New York session. Time and price have co-relations.

Learn more about time and price theory here.

Only Trade ICT Macros and ICT Kill Zones Time.

what is BOS and CHOCH in trading

BOS( Break of Structure) When the price breaks the recent higher high(in an uptrend) and lower low(in a downtrend) a valid BOS occurs.

Choch (Change of Character) refers to the shift in market sentiment. From Bullish to bearish and from Bearish to Bullish.

BOS(Break of Strucutre)	CHOCH ( CHange of Character)
Indicate the continuity of trend	Indicate the reversal of the trend
Price Break recent higher high or lower low point	Price break higher low, lower high

change of character vs break of structure