Swing high and swing low in gold trading
A swing high is a bar whose high is above the bars either side; a swing low the reverse; they define gold's structure, trendlines, stops and Fibonacci anchors.
Also called Swing point, Pivot high/low, Fractal
A swing high is a local peak: a bar with a higher high than the bars on each side of it. A swing low is a local trough. The number of bars required on each side varies (fractals use two; some traders use three or five), but the idea is the same: swing points are the turning points that define a chart’s structure. Trends are sequences of higher swing highs and higher swing lows, or lower ones.
How it applies to gold trading
Almost every chart technique on gold starts with swing points. Trendlines connect them; support and resistance are drawn from them; Fibonacci retracements run between them; breaks of structure and changes of character are defined by price taking them out; stops go beyond them because a swing point broken is the idea invalidated. On a 1-hour gold chart, a swing low that holds at 3,995 while price makes a higher high is the structure that justifies a long with a stop below 3,995.
Swing points are also where stop orders cluster, which is why Smart Money and ICT vocabulary treats them as liquidity: price often sweeps a swing low before reversing.
Marking the significant swings on the daily chart once a week, and on the 1-hour chart once a session, keeps the structure map current without redrawing it after every candle.
A common mistake
Marking every minor wiggle as a swing. The swings that matter are the ones visible on the timeframe above the trading timeframe.
See also: Market structure, BOS, Liquidity, Trendline.
Frequently asked questions
How do I identify swing highs and lows on gold?
Look for bars whose high (or low) exceeds the bars on both sides, using at least two or three bars each side to filter noise. Confirm on the higher timeframe that the swing is visible there.
Where should my stop go relative to a swing point?
Beyond it, with a buffer for gold’s wicks and spread. A stop exactly at the swing low is the one most likely to be swept.