🔹Price Swings
What are Price Swings?
A price chart is a sequence of prices plotted over a specific timeframe.
Price swings are formed on the chart by a group of candles that share the same characteristics in direction and strength.
The red dotted lines in the chart below mark the price swings of different degrees moving up or down.
Direction
Up (Bullish) or Down (bearish)
Strength:
Impulsive or corrective swings
Impulsive swings are quickly moving in one direction hence showing strength in the movement.
How to identify impulsive swings? In a down impulsive swing, the majority (at least 60%) of the candles are bearish and the majority of the candles close near their lows. The sequence of candles is lower highs and lower lows.
In an up-impulsive swing majority, (at least 60%) of the candles are bullish and the majority of the candles close near their highs. A sequence of candles is higher high higher lows.
More characteristics of Impulsive & Corrective waves
They are sharp
They are fast
They are trending (refer to lesson “Trend”
Wave 2 should not go under Wave 1
Wave 3 should not be the shortest wave
Wave 4 should not go to the price territory of Wave 1
Wave 2 and 4 should be similar in price and time by at least 70%
Corrective swings are slow-moving, indecisive and sideways
How to identify corrective swings? Candles are mixed (50-50): bullish, bearish, dojis. Most of candles close near the middle, lot of indecision candles (dojis), No sequence of higher highs, higher lows or lower highs or lower lows. In the below picture, the yellow circled part is a Corrective swing.
More characteristics of corrective waves
They usually take more time than their impulsive waves
They are both trending and non-trending
They are at least 3 waves
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