A Swing High & Swing Low (SHSL) is when the price action forms multiple candlesticks that are grouped together and considered to be part of one move in a certain direction. The Swing High, Swing Low movement is usually referred to as a move, a ‘leg’ or simply a swing. We call this a swing because it is one piece of price action in a certain direction that is always followed by a swing in the opposite direction.
A trader that identifies where the last Swing High or Swing Low occurred for a given symbol will have also identified strong support and resistance levels or where the price last reversed, why is this important? Well if you know highest high that the price reached before it reversed you will know that there was a lot of bears at that level that beat the bull. The image below shows what happens with a Swing high, so so you fully understand.
- Highest High = Two bars to the left and two bars to the right are lower than the Highest High.
- Lowest Low = two bars to the left and two bars to the right are higher than the Lowest Low.
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