Swing highs and lows

Price does not travel in a straight line; it moves in waves. The top of each wave is a swing high and the bottom a swing low. On a chart a swing high is a point that stands higher than the candles on both sides of it, and a swing low mirrors the rule — a candidate that fails to sit below its neighbours is not a low, however low it looks on the screen. Swing highs and lows are the alphabet of this level: the definition of a trend, the trendline and the reading of a break are all built on these points. The common misreading is to mark a single point and announce a conclusion. One high or one low gives you no direction; direction comes from the ORDER in which the points arrive, from comparing each one with the previous point of its own kind. The strength of the definition is that it rests on countable points rather than on gut feeling — two people can look at the same chart and mark the same swings. That is also its value for risk literacy: whoever works with something countable is looking at evidence, not at a hunch.

This content is educational information, not personalised investment advice. The chart examples are illustrative.

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