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2017issue C027

Constructing swing signals from a volume-weighted average cross

A swing-trading construction can generate entries and exits from a crossover between a volume-weighted moving average and a simple moving average. The same pairing is used to identify breakouts when the volume-weighted line sits far from the trend.

  • A swing-trading construction can generate entries and exits from a crossover between a volume-weighted moving average and a simple moving average.
  • The volume-weighted moving average is built so that both volume and price determine the plotted signal line, sitting farther from the trendline when volume is high and price is strongest.
  • The same crossover construction is used to identify breakout patterns in volatile markets, pairing above-average volume with price as a way to reduce false breakouts.
  • An illustrated swing example uses a 50-period volume-weighted moving average crossed with a 70-period moving average as the entry and exit signals.
Entries in this reading3 entries
Current trackSwing trading44 readingsMoving-average crossover108 readingsBreakout confirmation172 readings

A crossover that carries volume

A swing-trading construction can generate entries and exits from a crossover between a volume-weighted moving average and a simple moving average. The volume-weighted moving average is built so that both volume and price determine the plotted signal line.

A moving-average crossover is the construction rule: the crossing of the two average lines is the entry or exit condition. Swing trading uses that one defined signal set for multi-session entries, exits, and abstention.

How far the volume-weighted line sits

When volume is high and price is strongest, the volume-weighted moving average is described as plotting farther from the trendline. When volume is weaker, it plots closer.

The same construction on breakouts

The same crossover construction is used to identify breakout patterns in volatile markets. Pairing above-average volume with price is presented as a way to reduce false breakouts and favor continued upside after a breakout.

Breakout confirmation is the visual test that a move beyond a prior range is accompanied by high participation, read from how far the volume-weighted line sits from the trend.

A 50-period and 70-period swing pair

An illustrated swing example uses a 50-period volume-weighted moving average crossed with a 70-period moving average as the entry and exit signals.

FAS 15-minute candles with 50 VWMA and 70 MA

On the 15-minute FAS chart the volume-weighted 50-period line crosses up through the slower 70-period average near 27.7 around 4 November 2016, then later crosses back down near 35.3 around 16 November. Those two crossings are the swing entry and exit the article annotates. Values were read from the plotted candles and moving-average lines, not from a table.
On the 15-minute FAS chart the volume-weighted 50-period line crosses up through the slower 70-period average near 27.7 around 4 November 2016, then later crosses back down near 35.3 around 16 November. Those two crossings are the swing entry and exit the article annotates. Values were read from the plotted candles and moving-average lines, not from a table.Direxion Daily Financial Bull 3x ETF (FAS) · 15-minute · 2016-10-28T00:00:00.000Z to 2016-11-18T00:00:00.000Z

Prices are approximate readings from the published 15-minute candle chart for 28 October through 18 November 2016. Session gaps are omitted so the time axis stays strictly increasing.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
20 of 35 in the Swing trading track
201748-48 pp.Next on Swing tradingGolden-cross swing entry with a trailing-stop exitThe documented golden-cross trigger is a 50-period simple moving average crossing above a 200-period simple moving average on a daily candlestick chart.
All readings on this track · 35 readings
  1. 2001Swing trading with trailing stops and fixed loss exits
  2. 2003Linear regression swing alerts and trailing stops
  3. 2005Range-width gates for swing entries at base edges
  4. 2006Beyond setups: a six-factor trading process
  5. 2007Angle of ascent, chart scale, and style-fit
  6. 2010Stacking a short-horizon oscillator with a moving average and swing hold rules
  7. 2010A weekly contest long treated as one swing procedure
  8. 2011Four-color volume-price states for long-only swing actions
  9. 2012Classify momentum, velocity, or volatility before the swing signal
  10. 2013Swing rules as a portable entry and exit procedure
  11. 2013Constructing paired percent-b and stochastic swing oscillators
  12. 2013Give the fast band line and the slow stochastic complementary jobs
  13. 2013Smoothed percent-b divergences for numbered swing-wave rules
  14. 2013Portable swing rules for candle turns and a 1-2-3 wave count
  15. 2013A three-average swing and breakout case study
  16. 2013Constructing swing trades with a fifty-day average and a five-bar exponential average
  17. 2014From aliasing and dilation to a roofed stochastic swing
  18. 2014Channel width and trend-filter lookback as separate swing-trading choices
  19. 2016Constructing volume-confirmed multiday breakout swings
  20. 2017Constructing swing signals from a volume-weighted average cross
  21. 2017Golden-cross swing entry with a trailing-stop exit
  22. 2017One swing procedure: group leadership first, then a volume-price leave
  23. 2017Four-day green-candle breakout entry as one swing procedure
  24. 2017Swing pivots need a 100-period crossover and a breakout candle
  25. 2017Supply and demand zones as bounded swing maps
  26. 2018Three-bar volume-confirmed swing breakout
  27. 2018Tight stops first on swing breakouts with a range filter
  28. 2018Constructing trend and swing rules from horizon to crossover
  29. 2019Decade-level breakouts as one closed swing procedure
  30. 2019Inverse-pair swing trading with a shared buy-stop
  31. 2019Week-range next-day breakout on bitcoin pairs
  32. 2019Ranking strength before confirming a multi-timeframe breakout
  33. 2019Forty-five-degree multi-week swing breakout as a closed procedure
  34. 2020A dual pending-stop pair as one bitcoin swing construction
  35. 2020High-low activator, directional oscillator, and momentum swing agreement
By fieldEntry and exit rules206 readingsBy year2017100 readings
All 44 readings tagged Swing trading
Also on Swing trading5 readings
2017Swing pivots need a 100-period crossover and a breakout candle2017Golden-cross swing entry with a trailing-stop exit2018Constructing trend and swing rules from horizon to crossover2007Angle of ascent, chart scale, and style-fit2017One swing procedure: group leadership first, then a volume-price leave