Swing Chart

Type

Trend following Indicator

How does it work?

Swing charts plot a line on the chart, following the current trend until it is broken and then switching to follow the new trend.

When the candle makes a Higher High, the swing chart line will now begin plotting an upwards-sloping line. This line will continue following the up-trend until such time that the candle breaks the up trend by forming a Lower Low, the swing chart will now begin to follow the downtrend and plot a downward sloping line.

Trading Signals

As the swing chart is a trend following indicator it is not used to predict prices. It is simply a guide as to the current direction of the trend over the past days. This can be helpful in keeping you with the trend rather than trading against the trend.

Settings

Sharechart Default:  1 period

Note: If you select 1 period then it would take one Lower Low to swing down or one Higher High to swing up.

If you select 2 periods then it would take 2 Consecutive Lower Lows to swing down or 2 Consecutive Higher Highs to swing up. And so forth.

Example

Amcor Ltd, shown below, experienced a major double top formation on Swing chart in October 2003 before spiraling into a downtrend by forming lower highs and lower lows on Swing chart on the way down.

To change setting, go to Settings>Indicators>Swing Chart. The above chart had the following setting: