Using Swing Points To Identify Price Reversals

We know that there is no such thing as a 'holy grail' in Forex trading. However, when it comes to Forex charting, there is something that comes really close, and that is Swing Points. In fact, Swing Points really are the trader's best friend as they are so much simpler to spot than complicated candlestick patterns with exotic sounding names, and more consistent in meaning when found at significant confluences of support or resistance. If you train your eyes to see these simple yet powerful chart structures and make them the central point of your analysis, you will be amazed at how much more accurate your trading calls will become. Guaranteed.

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Monitoring Market Trend With COT Metrics

In case you are not familiar with it, let's have a quick overview of the widely proclaimed and yet widely misunderstood Commitments of Traders (COT) report. The primary agency with regulatory supervision of commodity futures and options markets in the United States is the Commodity Futures Trading Commission (CFTC). The CFTC's stated mandate is to ''protect market users and the public from fraud, manipulation, and abusive practices related to the sale of commodity and financial futures and options, and to foster open, competitive, and financially sound futures and option markets".

In line with this mandate, the CFTC collects and circulates data on Open Interest (number of contracts held, long and short) for markets in which 20 or more traders hold positions equal to or above the reporting levels established by the CFTC. In practical terms, this means almost any liquid financial market publicly traded in the United States, including currencies. The reason for doing so is to nurture a level playing field, so that the price effects that could result from large swings in market participants' buying and selling activities can be known in a reasonably timely and open manner.

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Trending Markets and Retracements

First and foremost, if the market you like to trade is not always trending on a higher timeframe like the Daily chart, don't worry. Due to the fractal nature of liquid financial markets, the characteristics of trending price action tend to look the same on all timeframes. Therefore, we might be in a corrective or consolidation sequence higher up, but when a high Reward/Risk setup is not available, one of those seemingly insignificant legs of the correction as seen on the H4 chart might actually be a sound short-lived 'trend', which is good enough for a scalping trade, when viewed on the M5 or M1 charts.

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