News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • *Reminder: Weekly Strategy Webinar tomorrow at 8:30am ET on @DailyFX !! https://t.co/lxd5fZnn4H
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfJE79 https://t.co/L15w1dzclc
  • Wow Liverpool... https://t.co/9Mx6Xmw4iS
  • With the $SPX, Bitcoin and Fed 2022 rate forecasts pushing record highs; the heavy economic docket for the coming week will make for some loaded trading potential. The events and markets I'm looking at ahead: https://www.dailyfx.com/forex/video/daily_news_report/2021/10/23/SP-500-Reversal-ECB-Decision-FAANG-Earnings-Top-Volatility-Themes-Next-Week.html https://t.co/1SGirtalSb
  • GDP (Gross Domestic Product) economic data is deemed highly significant in the forex market. GDP figures are used as an indicator by fundamentalists to gauge the overall health and potential growth of a country. Learn use GDP data to your advantage here: https://t.co/Yl9vM7kO6a https://t.co/wdbXlx7ChB
  • Further your stock trading knowledge and gain informed market analyses from our expert analysts @HathornSabin and @JMcQueenFX on Indexes with our free Q4 guide, available today.https://t.co/YQG1aaIT8C #Dailyfxguides https://t.co/qqYNi1RA2F
  • The continuity seen across these volatility cycles is a good thing. Historical precedence offer a blueprint for identifying conditions supportive for a vol-event to occur, and how they may unfold. Deepen your knowledge of historical volatility here: https://t.co/ZnyMVSjd2b https://t.co/1bNvAWr7Yy
  • US equities back to record highs, but inflation concerns remain. FTSE eyeing EU-UK spat. Get your weekly equities outlook from @JMcQueenFX here: https://t.co/W5TUhVJ1YZ https://t.co/tQdkW5ysQD
  • What are the Market cycles? How are currencies impacted in these cycles? How can these cycles impact forex trading patterns? Find out here: https://t.co/ckr2fUOWqW https://t.co/rc3wLhm8Bn
  • Support and resistance are the cornerstone of technical analysis, making it the foundation that you build your knowledge on. Build a stronger foundation here: https://t.co/yXLaRpl90I https://t.co/t1vWdPFotC
How to Identify and Trade Market Swings

How to Identify and Trade Market Swings

Walker England, Forex Trading Instructor

Talking Points:

  • Trend traders can wait for swings against the trend before entry
  • Pullbacks in price allow traders to buy the market at a lower price
  • An identified swing high or low can be used for setting risk and taking profit

Traders should first look for market direction, before implementing their favorite trading strategy. If a market is trending, traders can wait for a market swing to provide excellent opportunities for placing new entries in the market. Today we will look closer at market swings and how they can be traded by trend traders.

What is a Market Swing?

A market swing is a direct reference to the price action being displayed on the graph. Since price rarely heads in one specific direction, a swing helps define the changes in price. A swing high is looking at the current high displayed on a graph, while a swing low represents the current outstanding low. Normally these swings also help define the trend, if the swing highs are getting higher and the lows are getting higher as well that is a sign of a strong uptrend.

Below we can see an example of the swing high and swing low during an uptrend, on XAU/USD(Gold). Price has been trending upward culminating in price forming a swing high at $1,391.37. From this point, price has pulled back this week to form the current swing low in price which stands at $1,320.40. So now that you know how to spot a price swing, let’s look at how we can take advantage of them.

Learn Forex: Gold with Swing Highs and Lows

How to Identify and Trade Market Swings

(Created using FXCM’s Marketscope charts)

Trading Retracements

Normally traders look to trade swings back in the direction of the trend. These swings against longer term momentum are known as retracements and can allow traders some excellent trading opportunities. Much like in the example with gold any pullback in an extended uptrend can be seen as an opportunity to buy into the market at a cheaper price.

To execute a retracement strategy on a market swing, traders will look for price to put in a new swing low in an uptrend. An entry can then be made when momentum returns back in the direction of the primary trend. Many traders prefer to use an oscillator to time this portion of their strategy by using an indicator such as CCI, MACD or RSI. Risk can also be contained using market swings. In our example stops can be set under the swing low. In the event a lower low is printed, our trend is at least temporarily concluded and all positions should be vacated.

Learn Forex: Entries Using a Swing

How to Identify and Trade Market Swings

(Created using FXCM’s Marketscope charts)

Take profit levels in an uptrend can also be based around an identifiable swing high. As the trend resumes positions can be exited near the denoted point on the graph. Once the trade has concluded, traders can then wait for the next market swing to plan a new entry!

---Written by Walker England, Trading Instructor

To contact Walker, email WEngland@DailyFX.com

Follow me on Twitter @WEnglandFX.

To Receive Walkers’ analysis directly via email, please SIGN UP HERE

Interested in learning more about Forex trading and strategy development? Signup for a series of free “Advanced Trading” guides, to help you get up to speed on a variety of trading topics.

Register here to continue your Forex learning now!

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES