Transcription
Hello everyone, and welcome to another episode of technical analysis for beginners. My name is Mr. Crypto Tracker, and in this episode, I'm going to look at what swing highs and swing lows are, how you can identify them, and how you can use them to find trades.
Before we start this episode, please make sure to subscribe to the channel if you didn't do it so far, and also turn the notification bell on to get notified when a new video comes. Let's start with this question: What is a swing high and swing low? Swing means fluctuations. Swing traders use technical analysis to look for assets with short-term price momentum. Swing lows and swing highs are one of the most widely used terms among traders. It is used to identify trend directions and trend reversals. The swing point is the leading indicator that forecasts future trend reversals in the price chart. Advanced traders use the swing points to confirm minor or major trend reversals in the market.
Let's start with swing high. When two consecutive higher highs form on the left side of a candlestick and two consecutive lower highs form on the right side of the candlestick, the highest point of the middle candlestick is called swing high. So we consider five candles to find the swing points. Swing high is the highest price in the specific number of candlesticks' range. It is used as a key level on the price chart. Many retail traders use the swing high points as resistance or key levels because these are psychological levels, and retail traders benefit from these price levels.
As for the swing low, when two consecutive lower lows form on the left side of a candlestick and two consecutive higher lows form on the right side of the candlestick, the lowest price of the middle candlestick is called the swing low. Swing low is the lowest price in the specific range of candlesticks on the price chart, and retail traders use it as a support level.
Let's talk about the importance of swing highs and swing lows in trading. The primary benefit of swing highs and lows in price action trading is that it tells us about the beginning of a new trend. Because when a swing low forms, it symbolizes a beginning of a new bullish trend. In comparison, the formation of a swing high shows that it is the start of a new bearish trend. Another important fact of swing points is that it helps to draw the trend line and support and resistance zones. Because the touch points of a trend line are always the swing price points. You should always draw a trend line meeting the swing lows or swing highs. If a price point is not a swing point, you should avoid drawing trend lines from such point. This will help us to draw a valid trend line. I will talk about drawing trend lines in more detail in another episode.
Before I said we have, we should consider five candlesticks to find the swing lows or swing highs. Here you can see different situations that extremely low can fall. Swing low count can form by considering the close at the, the either the close or the open of the candles, as you can see here, or you can consider the shadows. So here you can see different situations that we can have a swing low, and also it's the same for the swing high. Here you can see different situations that a swing high can form.
Let's go on different charts and try to find swing highs and swing lows on different time frames. Monthly chart of Bitcoin, and as you can see here, we have a high here, and then we have two candles on the left side which has the lower highs. You can protect these highs, and also we have two candles on the right side that have, that they have uh lower highs as well. So this is a swing high for us, and as you can see, we selected five candles to find the swing points. And also here we have a swing low, and again, if you look at the, the left side of these middle candle, you can see two candles which has the higher lows, and also on the right we have two candles with higher lows. So this is a swing low in monthly time frame. With the same uh concept, I just labeled other swing highs and swing lows on the chart. And also here in these uh candle we have another swing high. We can mark it as a swing high because the last two candles and the last next day and the next two candles they have lower highs and lower lows. So this is the monthly chart.
Let's go to weekly chart and see what will happen to our swing points. So here we have, we are in weekly chart still. You can see, let me delete this, still you can see we have a swing high here, but you can find another swing point as well. For example, if you look at here in this candle, let me focus on it, zoom it. Here in this point we have another swing high because uh the last two candles and the next two candles they have lower highs. And also in this area you have another swing high. Here you have another swing low, and here again you have uh, no this is not the swing low, but this is a swing high. You can see a swing high here. So and and also if you go to daily time for instance, definitely you will find more swing points on your chart. It depends on, on your trading style, whether you are, excuse me, whether you are a, a, a weekly time frame trader, like a long-term trader, or you are short-term trader, or even you are a scalper. So based on these rules, you can go on different time frames and find different swing points. For example, here we have a swing high, this is one swing point, swing lows, uh this is another swing lows, and yeah, like this you can go on different time frames and try to find different swing highs and swing lows.
Um, this is uh one topic that we need to understand it for the coming episodes because uh we, I'm going to talk more about the market structure. I already published one video on market structure, and this is the prerequisite for the, for the second part of the market structure. So I highly recommend you to go on different time frames and try to find the swing highs and swing low points on different time frames. Have a good time and see you on the next episode.