What it means
A swing high is a candle whose high is higher than the highs of a set number of candles on both sides of it. A swing low is a candle whose low is lower than the lows of the candles on both sides. They are the turning points of price.
The number of candles on each side is a setting. Three on each side is common; two gives more, smaller swings; five gives fewer, larger ones.
Why traders use it
Almost every other concept is built from swings: trend (higher highs and lows), support and resistance, break of structure, Fibonacci anchors and stop placement. If the swings are marked inconsistently, everything built on them is inconsistent too.
Traders also watch swings because stop orders and breakout orders are often placed just beyond them, which makes them common reaction points.
Chart examples
Swing highs and swing lows
Confirmed versus unconfirmed
How to identify it objectively
- 1Choose the number of bars on each side (for example 3) and keep it fixed.
- 2A swing high exists when the candle's high is above the highs of the 3 candles before and the 3 candles after it.
- 3A swing low exists when the candle's low is below the lows of the 3 candles before and the 3 after.
- 4The swing is only confirmed once the 3rd candle after it has closed. Before that it is a candidate that can disappear.
- 5Equal highs or lows are a separate case: decide in advance whether a tie counts as a swing.
Bullish use
- 1In an uptrend, the most recent confirmed swing low is the level that should hold.
- 2A pullback that stops above the last swing low and turns up keeps the bullish sequence intact.
- 3Stops for long positions are commonly placed below a confirmed swing low.
Bearish use
- 1In a downtrend, the most recent confirmed swing high is the level that should hold.
- 2A rally that fails below the last swing high keeps the bearish sequence intact.
- 3Stops for short positions are commonly placed above a confirmed swing high.
What confirms it
- The required number of candles on both sides have closed.
- The swing is clearly separated from nearby candles, not a tie.
- Price reacts when it returns to the swing level later.
What invalidates it
- A later candle exceeds the candidate before confirmation: the swing moves.
- The setting was changed after the fact to create or remove a swing.
- Price closes through the swing level, turning it into broken structure.
How a hypothetical setup is built
Entry
After a pullback in an uptrend, enter when a candle closes back up from above the last confirmed swing low.
Stop
Below the confirmed swing low, plus a small volatility buffer.
Target
The most recent swing high, or the next liquidity level above it.
A hypothetical illustration of how the concept is turned into a plan, not a recommendation. Practise it on a paper account first.
Related concepts
- Market StructureHH, HL, LH and LL
- Market StructureBreak of Structure (BOS)
- Market StructureInternal vs External Structure
- Full guide on The TradeskillSupport and Resistance Levels
Historical testing
The Tradeskill has not published a backtest of swing-based entries. Swings themselves are not a trading signal; they are the reference points other rules use. To test the rule above yourself, fix the bars-each-side setting, replay at least 50 examples on one market and record the result in R.
Limitations: when it fails
- Swings are only known after the fact: a 3-bar swing appears three candles late.
- Different settings produce different swings, so two traders can see different structure.
- In choppy markets swings form constantly and mean little.
- A swing on a lower timeframe may be noise on a higher one.
Knowledge check
Pick an answer to see the explanation. Nothing is saved.