How to detect a swing high? (Fibonnaci Retracement)

Hello everybody,

I am new in this forum and I am reading the article about Fibonnacci Retracement

I don’t really understand how to detect a swing high. It says:

“A Swing High is a candlestick with at least two lower highs on both the left and right of itself.”

What does it means exactly ?

One red candlestick surrounded by two green candlesticks ?
Does the shadows matters ?

Thanks

Hi Alex,

It means just that; swing high = candlestick standing out with the highest high [ which implies that the candles to its right and left have lower highs ( regardless of whether they are red or green ) ]

Hope the e.g below makes sense.

Cheers!


Thanks I understand better now.

So just to be sure I am right, could you confirm me my two observations below are good?

Thanks



Hi,

The swing low looks right to me (assuming it is the recent swing low before the uptrend to its right)

The swing high…hmm…well…
Technically, it is [B]a[/B] swing high, but is it the high of the [B]most recent[/B] swing?
( by the way, is that 1min or 5min? the reason i ask is coz the lower the time-frame, the more the swings; personally find swings easier to identify on a higher timeframe… )

Ok thank you.

Indeed the swing high isn’t the most recent one. I was just looking for the candlestick pattern.

I understand now that when tracing Fibonnaci retracement I should use only the most recent Swing high or swing low.

The timeframe was 1min btw.

Thanks

You’re welcome.

PS: another ‘trick’ would be to draw the Fib on a higher trame-frame (e.g daily), then come down to lower time-frames (e.g 4-hour, 1-hour) to look to trade opportunities at those same levels.

Cheers :slight_smile:

There is a line of thought that Fibonacci levels are better applicable to higher time frames - daily , 4 hrs than lower time frames - 1 hr , 30 mins or less. What has been your experience ?

Hi PipRider,

The higher time-frames are generally more reliable for swing trading since they have more time information in them (and can cover different trading sessions). I mostly trade off the H4 and D1.

I don’t use Fibonacci as a primary tool. Horizontal S/Rs are more important to me. On out-of-the ordinary trades (e.g counter-trend trades), I sometimes use Fibs to confirm if the levels I’m watching are likely to be watched by many people. It is super cool if 38.2 or 50.0 or 61.8 Fibs line up with horizontal S/Rs since many will likely be watching these.

If you are interested in swing trading using raw price (learning to read price action without indicators), you are most welcome to a great community of swing traders here: 301 Moved Permanently

Cheers!

ideally the swing high will create a inverted “V” formation (looks like a letter V), with the highest candle in the middle and two lower highs on both sides. reverse for a swing low.

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it’s practically the same, except that when you place a Fibonacci on a lower timeframe, you will see more candles. understand that lower timeframes comprise the higher timeframes (higher timeframes = less candles, lower timeframes - more candles).

you may need a trained eye to work on the lower timeframes but the only difference between timeframes is candle quantity.