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1999issue C101-5

Separate two-bar swing direction from peak-valley trend

A two-bar swing changes direction only after two consecutive higher highs or two consecutive lower lows, but trend state changes only when the nearest peak or valley is taken out. A long is considered only in that uptrend, and only when the three-bar high-low average supports it with a close through the visible average.

  • A two-bar swing turns up only after two consecutive higher highs and turns down only after two consecutive lower lows.
  • Trend state changes only when price takes out the nearest peak to turn up or the nearest valley to turn down, so a later two-bar downswing can form inside an uptrend.
  • A long is considered only while the swing-defined trend is up, and a peak break that turns trend up is not a long if price never closes above the average of the highs.
  • An open long or short is exited when price closes through the flipped high-low average.
Entries in this reading3 entries
Current trackSwing chart34 readingsTrend following89 readingsMoving average449 readings

This article describes a historical workflow for a two-bar swing, a peak-valley trend state, and a three-bar high-low average. A long is considered only while the swing-defined trend is already up, and a short is considered only while that trend is already down.

Two-bar swing direction

A two-bar swing turns up only after two consecutive higher highs and turns down only after two consecutive lower lows. Peaks and valleys are marked as the later swing-reversal points of that construction.

Peaks, valleys, and trend state

A peak is an upswing followed by a downswing. The nearest peak is the level that must be surpassed before the trend can turn up. A valley is a downswing followed by an upswing. The nearest valley is the level that must be taken out before the trend can turn down.

Trend state changes only when price takes out the nearest peak to turn up or the nearest valley to turn down. After a peak is surpassed, a later two-bar downswing can form without changing the uptrend until a valley is taken out.

Amazon.com two-bar Gann swing on 30-minute bars

The two-bar swing keeps reversing on paired higher highs or lower lows, but the overlay stays dashed until price takes out the prior peak and only then turns solid. The last selloff is therefore still a downswing inside an uptrend. Vertex prices were read from the labeled dollar scale on the 7–11 May 1999 Amazon.com 30-minute chart.
The two-bar swing keeps reversing on paired higher highs or lower lows, but the overlay stays dashed until price takes out the prior peak and only then turns solid. The last selloff is therefore still a downswing inside an uptrend. Vertex prices were read from the labeled dollar scale on the 7–11 May 1999 Amazon.com 30-minute chart.Amazon.com · 30-minute · 1999-05-07T00:00:00.000Z to 1999-05-11T00:00:00.000Z

No printed table; values are swing-overlay turning points read to the nearest half dollar on a four-dollar grid. The 11 May high is the $154 peak named in the article. Order is left-to-right along the overlay, not a bar-by-bar close series.

The high-low activator

The high-low activator is a three-bar average of highs and a three-bar average of lows. The averages appear one at a time and flip only after a close through the visible average. Once the swing-defined trend is set, that visible average is the close-through confirmation and the trailing exit.

When a long is allowed

Uptrend entries are a close above the average of the highs, the first peak break that turns trend up, or a later surplus of the nearest peak by two ticks. Each of those cases requires the high-low average to support the long. A peak break that changes trend to up is not a long if price never closes above the average of the highs.

When an open position is exited

An open long or short is exited when price closes through the flipped high-low average.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
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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 year199959 readings
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