I have been using what I believe to be the SMC method of identifying swing highs and lows in the market. When the price breaks a swing high I look for a new high, and if price breaks a low I look for a new low. This method establishes a “trading range” between the most recent high and low.
The problem I am having with applying this methodology is as follows:
point 3 is my swing high, and point 2 is a swing low. Therefore the trading range is the area between points 3 and 2. I use a three bar pull back to define a retracement. Using this method, point 1 becomes a new high as it breaks the swing high at point 3 and there is no pull back under the three bar pullback rule.
The problem is the the new trading range is established between points 1 and 3, which is quite wide, and because of this very wide trading range all of the “visual” swing points within the area labelled “Area 2” are missed because the next time a Swing point is identified under this system is at point 4 on the chart.
I personally feel like there is a bunch of swing points within “Area 2” that are being missed. Does anyone have any solutions to the methodology or things I might be missing here?
It seems the issue lies in the wide trading range between points 1 and 3. One solution could be to adjust your swing high/low criteria, such as using smaller timeframes or tightening the range to capture more subtle price movements. Also, consider using additional indicators for confirmation of key levels.
It sounds like you’re missing swing points within the larger range due to your three-bar pullback rule. Consider refining your entry criteria by allowing for smaller pullbacks or using different timeframes for better context. You could also incorporate more indicators to help identify swing points within larger ranges.
