Trading glossary
What is a change of character (CHoCH)?
A change of character is the first break of a swing against the trend, an early sign the trend may be reversing.
In an uptrend, a change of character happens when price breaks below the most recent higher low. In a downtrend, it happens when price breaks above the most recent lower high. It is the first point where the trend's own structure has failed.
It is an early warning rather than a confirmed reversal. Many traders wait for a new swing in the new direction before treating the trend as changed.
How traders use it
- Identify the swing that would cause a change of character before it happens.
- Treat the first change of character as a reason to stop trading with the old trend, not necessarily as a reason to trade against it.
- Look for confirmation on the retest of the broken swing.
Example
Gold has been making higher lows, the latest at 2,355. After a failed push at 2,390, price closes at 2,348, below that higher low. That is a change of character: the first break against the uptrend.
Frequently asked questions
Is a change of character a reversal signal?
It is an early sign. Many changes of character are followed by the old trend resuming, so confirmation matters.
How does it relate to chart patterns?
A head and shoulders neckline break is a change of character: the uptrend's last higher low gives way.
Related terms
Related patterns
Often confused with
Educational content only, not financial advice. Chart patterns describe probabilities, not certainties, and every pattern can fail. See our disclaimer.