Swing Failure Pattern

The Swing Failure Pattern Strategy is a technical analysis pattern that occurs when a price move or trend fails to continue beyond a certain point, resulting in a reversal or “failure.” This pattern can occur on any currency pair or time frame and is often used by traders to identify potential entry and exit points in the market.

What is a Swing Failure Pattern?

Here are three steps for trading the Swing Failure Pattern Strategy in forex Market:

  • Identify the pattern: Look for one of the swing failure patterns described above on your chart. These patterns may occur on any time frame, so choose the one that best fits your trading style and risk tolerance. I find that the long-term chart time frames tend to be more reliable as they contain more price data.
  • Confirm the pattern: Make sure the pattern is clearly visible and meets the criteria for the specific pattern you are looking for. This may involve waiting for the price to complete the pattern or confirming the pattern with other technical indicators.
  • Enter the trade: Once you have identified and confirmed the swing failure pattern, you can enter a trade in the direction of the potential trend reversal. Use stop-loss orders to manage risk and take profits at pre-determined levels or using other technical indicators.

Swing Failure Pattern Strategy

Buy Signal

  • Identify the trend: Look for an upward trend on your chart, using technical indicators such as moving averages or trend lines to confirm the trend direction.
  • Identify a potential entry point: Look for a price action pattern or technical indicator that suggests the market is ready to turn higher. This may include a swing failure pattern, a breakout above resistance, or a bullish divergence on an oscillator.
  • Confirm the signal: Before entering a trade, make sure the signal is strong and supported by other technical indicators or fundamental analysis. Use stop-loss orders to manage risk and take profits at pre-determined levels or using other technical indicators.
Swing Failure Pattern Strategy Buy Signal
Swing Failure Pattern Strategy Buy Signal

Sell Signal

  • Identify the trend: Look for a downward trend on your chart, using technical indicators such as moving averages or trend lines to confirm the trend direction.
  • Identify a potential entry point: Look for a price action pattern or technical indicator that suggests the market is ready to turn lower. This may include a swing failure pattern, a breakout below support, or a bearish divergence on an oscillator indicator.
  • Confirm the signal: Before entering a trade, make sure the signal is strong and supported by other technical indicators or fundamental analysis. Use stop-loss orders to manage risk and take profits at pre-determined levels or using other technical indicators.
Swing Failure Pattern Strategy Sell Signal
Swing Failure Pattern Strategy Sell Signal

Conclusion

The Swing Failure Pattern Strategy is a technical analysis tool that can be used by traders to identify potential trend reversals in the forex market. These patterns can occur on any time frame and may include the double top, double bottom, head and shoulders, and reverse head and shoulders patterns. While swing failure patterns can be a useful tool in a trader’s analysis, they should not be relied upon exclusively and should be used in conjunction with other technical and fundamental analysis as well as risk management strategies. Traders can use these patterns to identify potential entry and exit points in the market and to confirm the strength of their trades.