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1991issue C081-4

Five-count swing-chart construction and break rules

A swing-chart starts two directional counts at zero and flips the swing state when either count reaches five. The horizontal swing-line printed at that reversal is then used to time a break after congestion and to locate later support or resistance.

  • Start the up-count and the down-count at zero, then add one on a new high or on a new daily low.
  • Treat the swing state as up or down only when a count reaches five, then reset both counts to zero and mark a horizontal swing-line at the reversal.
  • Leave both counts unchanged on an inside-day, and update one count from the close of an outside-day.
  • After congestion, define the trade signal as penetration of a recorded swing-line, and reuse prior swing highs and lows as support, resistance, last-resort stops, and later entry sites.
Entries in this reading3 entries
Current trackSwing chart34 readingsSupport and resistance170 readingsRule-based entry174 readings

How the counts are built

A swing-chart is a directional chart built by counting successive new highs or new lows until a chosen count flips the trend state and draws a horizontal reversal line. Construction starts both the up-count and the down-count at zero. A new high adds one to the up-count. A new daily low adds one to the down-count.

When the up-count reaches five, the swing state is treated as up. When the down-count reaches five, the swing state is treated as down. Both counts then reset to zero. A swing is recognized only after at least five days of one-way movement. Other styles may substitute a different day count, such as two-to-three or seven.

Inside-days and outside-days

An inside-day does not make a new high or a new low and does not change either count. An outside-day is counted from the close. A positive close adds one to the up-count. A negative close adds one to the down-count.

What the swing-line records

Horizontal swing-lines mark the price levels at which recorded swings reverse. Later breaks and tests are judged against those same swing-lines.

Congestion and the break rule

Congestion is a narrowing swing structure in which successive upper swing-lines step lower and successive lower swing-lines step higher. In that congested structure, a trade signal is defined when price penetrates a swing-line. The rule-based-entry initiates, re-enters, or stands aside only when price penetrates a recorded swing-line after congestion.

Later support, resistance, and stops

Prior swing highs and lows are treated as later support or resistance. That treatment includes former swing highs acting as support during an advance and a failed support line preceding a larger decline. The same swing levels are specified as last-resort stop locations and as sites for entry, re-entry, or adding size after a test of an old swing high or low.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
5 of 30 in the Swing chart track
19921-4 pp.Next on Swing chartConstructing the Gann quarterly swing from the prior quarter's intraday rangeConstruct a quarterly upturn only when the Dow Jones Industrial Average trades above the prior calendar quarter's intradaily high, not merely above that quarter's closing high.
All readings on this track · 30 readings
  1. 1982Constructing range resistance from harmonic swing divisions
  2. 1984Gold swing chart: failed highs, wash-out, and a boxed pivot range
  3. 1988Remaining life on a percent-filtered swing chart
  4. 1991Ranking turning points with percentage swing filters
  5. 1991Five-count swing-chart construction and break rules
  6. 1992Constructing the Gann quarterly swing from the prior quarter's intraday range
  7. 1992Audit quarterly swing breakouts with a slower average cross
  8. 1992Weekly swing invalidation and the trailing stop
  9. 1992Quarterly swing chart construction and trend duration
  10. 1998A two-bar swing is unfinished until it names the stop
  11. 1999Multiple time-frame swing-channel trade setups
  12. 1999Separate two-bar swing direction from peak-valley trend
  13. 2000Constructing peak-trough swing reversals
  14. 2002Swing charts as shared grammar for trading mentorship
  15. 2002Confirming the last leg of a zigzag trend filter
  16. 2004When a late trend bends: test the pause before sizing a reversal
  17. 2006Crude oil swing counts and cycle clusters
  18. 2006When late rallies flatten: a swing-chart classroom
  19. 2006Relocating trading certainty to the decision process
  20. 2008Swing highs, bar-count pace, and the cost-price stop
  21. 2010Constructing suspect versus confirmed swing trends
  22. 2010Constructing swing charts from clear bar ranges
  23. 2010Building price force maps from two-bar swings
  24. 2010Clear-method swing-chart construction
  25. 2011Treat a squared-chart swing forecast as a same-day hypothesis
  26. 2012Cycle mode construction from aligned bandpass swing waves
  27. 2013Stacked swing lows and breakout retrace tests
  28. 2015Building swing charts from perceptually important points
  29. 2015Construct a zztop from perceptually important points
  30. 2016Isolating swings with percentage trend thresholds
By fieldTrend and channels181 readingsBy year199198 readings
All 34 readings tagged Swing chart
Also on Swing chart5 readings
1982Constructing range resistance from harmonic swing divisions2011Treat a squared-chart swing forecast as a same-day hypothesis2013Stacked swing lows and breakout retrace tests2015Constructing fractal swings as support-resistance atoms1998A two-bar swing is unfinished until it names the stop