A two-bar swing is unfinished until it names the stop

Analysis is not the plan

A swing-chart marks successive highs and lows so trend direction and support or resistance can be read from price structure rather than from a single bar. In the archive workflow that reading is still only analysis. Market analysis and a trading plan are treated as separate modalities that must stay aligned: analysis can identify a change in trend or support, while the plan states the action to take.

A valid plan is defined as having at least market direction, tradable trend, support and resistance, action points, and money-management rules covering capital, stops, profit protection, and position size. Without fixed rules a plan cannot be backtested. A plan that failed to show a positive mathematical expectation in a backtest is described as unable to work later. Rule-based entry is the fixed procedure that states when to enter, exit, or stand aside so the whole plan can be checked as one process.

A two-bar swing checked by hand

A two-day swing definition was substituted for a three-day definition, then checked by hand on daily and intraday periods to see whether the shorter swing still supplied trend direction plus support and resistance. A mechanical plan is required to rest on a simple geometric, mathematical, or time basis, to avoid curve-fitting, and to remain able to change with the market.

How swing direction becomes a tradable trend

Swing direction turns up only after two consecutive higher highs and turns down only after two consecutive lower lows. An upswing is that change to upward swing direction. A downswing is the opposite change after two consecutive lower lows. An uptrend is recorded only when price takes out the nearest peak after a prior downtrend, and a downtrend only when price takes out the nearest valley after a prior uptrend. The tradable trend is the immediate swing direction used for action, which may differ from the broader market direction.

Support is the valley of the prior defined swing and resistance is its peak. A sequence of rising valleys is treated as a possible bottom warning and a sequence of dropping peaks as a possible top warning.

Long and short setups share one procedure

A long setup requires an uptrend plus a close above the hi-lo activator, then the first of three action points: a close above the activator, a swing change from downtrend to uptrend with the activator sell-stop below the bar, or a two-tick break of the nearest peak with that same stop below the bar. Shorts are the mirror image. The illustrated case takes trades only with the defined trend and notes that results will differ by market.

The same level trails the open risk

The hi-lo activator is a three-period average of highs or lows used as both entry trigger and trailing stop, plotted one period forward for the next session or from the live bar for same-day monitoring. After a buy setup the sell-stop trails rising bars, and a close through it is treated as a trend-change cue. A trailing stop follows favorable price and bounds loss or open exposure from before entry through the life of the position.

Open trades are closed on a close through the hi-lo activator, or on a 38% retracement of the current swing after price has already passed the activator, without waiting for the close.