Learn To Trade Price Action – The Swing Low

A good friend of mine asked me the other day to expand a little on the trade term “swing low” – and to outline it’s significance/importance.

If you are not at all familiar with Japanese Candlestick Patterns – I strongly suggest you take the time to read up and learn to recognize these “formations” in your sleep – as they provide excellent graphic representation of price over time, and are invaluable to successful trading.

You can learn more here.

In any case – the swing low. I’ve included the following chart of SLV (a silver ETF) with hopes of pointing it out. Let me try to explain this in as simple a way as I can.

A “swing low” occurs when the “high of a given day” – takes out (or surpasses) the “high” of the previous day in a recognized down trend. So the series of “lower lows” and “lower highs” is essentially broken with the recognition of the “swing low”.

Lets look:

Swing Low

I  Swing Low

I know I know…..”lower highs” and “higher lows” all sounds a bit confusing,  but if you just take your time and work it out candle per candle you’ll see it. A “swing low” is suggestive that the current down trend may be ending as the high of the day is now “higher” than the high of the previous day! Indication that price action is likely shifting from down  – to up!


Hope it helps.





2 Responses

  1. Sean North December 7, 2012 / 5:51 am

    You’ll be missed by many of us over at SMT. But you’re bookmarked for a regular read. The above lesson was excellent.

    • Forex Kong December 7, 2012 / 8:35 am

      Hi Sean – thanks. Frankly I just can’t take it anymore – the day after day waffling, change of analysis, the “if’s”…”hope” “maybe’s” etc..

      After a full month or two of observation / contribution there its’s clear that no one knows what’s going on in the markets – and the liklihood of making any money at all (following the suggested trade strategy) has all but disappeared.

      As I had suggested earlier – we need to be adaptable / fluid in the current environment – and what worked last week – may not work this week. It’s obvious it’s not working there so…

      I hope to see you poking around here! – So don’t hesitate to get in here / ask questions etc!

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