No decent swing high formed yet

[vergis92]

I think there's room for one or two more down days before going higher!

Fundamentals confirm a recovery but on the swing chart there's no decent swing high
formation yet, a breach of which would confirm a swing buy signal...

I suspect it may take several days in the process of the formation of such a decent high,


what's your opinion on swing trading theory??



certainly it's a great trend confirming tool but not a leading indicator, then there's
fundamental report warnings which may lead the market by weeks but these are only
warnings and cannot pinpoint any particular day, that's when I look at swing charts
to confirm a change of trend, attempting to use swing trading exculsively leads to
inevitable false signals and conflicting intermarket analysis.

 

[tomorton]

Hi vergis92 - The FTSE100 has formed a very credible swing high today but you might (I hope) be looking at another index - I admit the S&P and Dow are not showing clear moves up or down over the recent 2 weeks.

I like swing trading, as it does not demand much screen-time, its readily capable of being developed through realistic objective back-testing of available data and charts, and its less stressful than the instant decisions of daytrading. But a swing high is a good sell signal: can you not short the market when the high is made and price falls back into the downtrend?

 

[vergis92]

Hi vergis92 - The FTSE100 has formed a very credible swing high today but you might (I hope) be looking at another index - I admit the S&P and Dow are not showing clear moves up or down over the recent 2 weeks.

I like swing trading, as it does not demand much screen-time, its readily capable of being developed through realistic objective back-testing of available data and charts, and its less stressful than the instant decisions of daytrading. But a swing high is a good sell signal: can you not short the market when the high is made and price falls back into the downtrend?

Hi,

From what I know and have back tested on swing theory, a reliable swing high is a sequence of 3 or more up days, (up meaning higher high and higher low)
then if price retreats and consilidates lower (important) and then takes out that swing high that will be a buy signal, a direct breach of the high without few days of consolidation also suggest a false breakout.

Looking at nasdaq and US indices, no such sequence of 3 up days yet,

This is gann-derived swing theory, works great in a trending market but it's a failure
in a ranging market as it has strict criteria so as to filter out minor/false turning points
(by the time you get a buy you are already on top of range...)


do you believe these definitions could have some logic, or is just another opinion?

 

[tomorton]

Hi vergis92 - I agree with the definition of a swing high / low. And yes, the US is not showing a clear decsion yet. As these 3-day-based signals can be so far apart I also use short-term swing signals based on a 2-day or 1-day pattern such as a key reversal day or whiplash etc., e.g. some of the signals in Street Smarts by Raschke & Connors.

I know the 3-day swing pattern is not supposed to set up well in ranging price action but actually the FTSE100 has not shown a proper swing high for a long time until yesterday - and the price action has been consistently downtrending.

 

[vergis92]

I'd be really pissed off and surprised if the market doesn't bottom and form that swing high this
week, so far it's only given relief rally rather than reversal, I bet it will rally when everyone feels
most intimidated and fear is at peak, yesterday the newspapers , TV, all reported as if a disaster
was to come, but I'd rather stick to the old saying ' buy the rumor-sell the news'