Please clear my confusion

I feel confusion with a swing high and a high high & with a swing low and a lower low. Actually, I can not find out distinguish between this two word. Please, clarify it .

Swing High & Low basically you could look at it as a direction of the trend.



I hope it helps you.

Please, tell more…

Hello, BD

In the previous reply, GicaEric explained higher highs and lower lows very well. But, the question of swing highs and swing lows was only touched on. Here is some more insight into swing highs and swing lows.

Suppose I show you a chart — call it Chart A — which has the time and price scales, and all of the labels, removed. In other words, this chart just shows candles on a grid. You will not be able to determine what currency pair, what time frame, or what time period this chart represents.

Chart A.

Now, let’s add fractals to highlight the highs and lows in this chart. Notice that — on a very small scale — each fractal high is a “higher high”, because it is higher than 2 or more adjacent highs on either side of it. And — on a very small scale — each fractal low is a “lower low”, because it is lower than 2 or more adjacent lows on either side of it.

Chart A with Fractals.

Finally, let’s add an indicator called zig-zag to this chart, to highlight the price swings. Notice that the zig-zag oscillates upward from a fractal low to a fractal high, and then back down to another fractal low, and so forth — but, it does not touch every fractal high or low. The zig-zag in this configuration (with the parameters that I specified for it) traces out larger “swings” in price.

If we define the green and red lines of the zig-zag as “price swings”, then the fractal highs and lows which mark the turning points (where the green lines end and the red lines begin, and vice versa) are “swing highs” and “swing lows”.

Chart A with Fractals and Zig-Zag.

I removed the time and price scales, as well as all the identifying labels, from this chart in order to make a point: Price swings are not defined by their extent in pips, or by their duration in time. Price swings are defined by the market structure in which they occur.

In the third image, above, you can’t tell whether the largest price swing represents a 10-pip price move, or a 1000-pip price move, or something in between. This illustrates the true “fractal nature” of price charts — not just forex price charts, but price charts in any active, liquid market:

Large and small fluctuations in price follow paths which are identical in shape and appearance, and differ only in size.

In the next post, I will demonstrate this “fractal nature” of price charts.

Compare “Chart B” in this post to “Chart A” in the previous post. The two charts are of the same currency pair.

Can you guess the time frames involved?

I will add fractals, and then the zig-zag (same parameters as before), to illustrate the similarity between Chart A and Chart B.

Chart B.

Chart B with Fractals.

Chart B with Fractals and Zig-Zag.

Here is the missing information from the two charts in this discussion.

Chart A is a 5-minute chart of GBP/USD, covering the time period from midnight June 6 to 1pm June 6 (New York time). Overall the width of the chart is 13 hours, and the height of the chart is 112 pips.

Chart B is a 1-week chart of GBP/USD, covering the time period from early August 2003 to early December 2007. Overall the width of this chart is 4 years and 4 months, and the height of the chart is 6,115 pips.

Finally, the parameters of the zig-zag indicator used in these examples are 17-5-3.

What Chart A and Chart B illustrate is that:

Swing highs and swing lows, and the price swings which they define, are a matter of perception and scale.

Good one Clint.