What is a Swing Chart?

A swing chart is a type of technical analysis chart that focuses on price movements by identifying market swings, trends, and reversals. It highlights key turning points in the market rather than tracking every minor price fluctuation. Swing charts help traders filter out noise and focus on significant market movements.

Swing charts are commonly used in swing trading, a strategy that aims to capture short-to-medium-term price movements in financial markets.

How a Swing Chart Works

A swing chart is constructed based on price swings, where:

1. An upswing is created when price rises above a previous high.
2. A downswing occurs when price falls below a previous low.
3. The chart only updates when price moves beyond a predefined threshold (e.g., percentage or point-based movement).

Unlike traditional candlestick or bar charts, which display all price data, swing charts focus on trend direction and are useful for spotting reversals and trend continuations.

Swing Chart Example

• If a stock moves £5 higher from its last low, an upswing is recorded.
• If the stock then drops £3, a downswing is plotted.
• The chart updates only when the price surpasses the defined swing threshold.

This technique eliminates insignificant fluctuations, making trends clearer.

Why Traders Use Swing Charts

Swing charts provide multiple advantages for technical traders:

• Trend Identification: Easily spots market trends without unnecessary noise.
• Clear Entry & Exit Points: Helps traders determine where to buy or sell.
• Effective for Swing Trading: Ideal for short-to-medium-term trading strategies.
• Reversal Confirmation: Identifies support and resistance levels for better decision-making.
• Adaptable Across Markets: Works in stocks, forex, commodities, and crypto.

Swing Chart vs. Other Charts

Feature	Swing Chart	Candlestick Chart	Line Chart	Bar Chart
Focus	Trend Swings	Daily Price Action	Closing Prices	Open, High, Low, Close
Noise Reduction	High	Low	High	Low
Best Use Case	Swing Trading	Day Trading	Long-Term Trends	Detailed Price Analysis
Custom Thresholds	Yes	No	No	No

Swing Trading with Swing Charts

Traders use swing charts to follow key trading rules:

1. Enter Trades at Reversals – Buy at swing lows, sell at swing highs.
2. Follow the Trend – Stay in trades as long as upswings/downswings continue.
3. Use Stop Losses – Place stop-loss orders below previous swing lows for risk management.
4. Identify Breakout Levels – Swing charts help confirm support/resistance breakouts.

FAQs

What is a swing chart?

A swing chart is a technical analysis tool that tracks market swings, focusing on major price movements while filtering out small fluctuations.

How is a swing chart different from a candlestick chart?

A swing chart only updates when price moves beyond a defined swing threshold, whereas a candlestick chart shows every price fluctuation within a time period.

What is a swing threshold in a swing chart?

It is the minimum price movement required for the chart to update, usually set as a percentage or point-based movement.

Is a swing chart useful for day trading?

Swing charts are better suited for swing trading, but some day traders use them to identify intraday trends.

How do swing charts help in technical analysis?

They highlight trends, reversals, and support/resistance levels, improving trade decision-making.

Can swing charts be used in forex trading?

Yes, swing charts work well in forex trading to track currency price movements.

How do traders determine swing highs and swing lows?

Swing highs occur at price peaks, and swing lows form at price troughs, based on previous market structure.

Are swing charts automated in trading platforms?

Some trading platforms provide swing charting tools, while others require manual plotting.

What indicators work best with swing charts?

Moving averages, Fibonacci retracements, and RSI are commonly used alongside swing charts.

Can swing charts be used for long-term investing?

Yes, but they are primarily designed for short-to-medium-term trading strategies.