![]() ![]() In this case a swing trader could enter a sell position on the bounce off the resistance level, placing a stop loss above the resistance line. It represents a price level or area above the current market price where selling pressure may overcome buying pressure, causing the price to turn back down against an uptrend. A stock swing trader would look to enter a buy trade on the bounce off the support line, placing a stop loss below the support line. As a result, a decline in price is halted and price turns back up again. Support and resistance lines represent the cornerstone of technical analysis and you can build a successful stock swing trading strategy around them.Ī support level indicates a price level or area on the chart below the current market price where buying is strong enough to overcome selling pressure. Traders often look at the 50% level as well, even though it does not fit the Fibonacci pattern, because stocks tend to reverse after retracing half of the previous move.Ī stock swing trader could enter a short-term sell position if price in a downtrend retraces to and bounces off the 61.8% retracement level (acting as a resistance level), with the aim to exit the sell position for a profit when price drops down to and bounces off the 23.6% Fibonacci line (acting as a support level). ![]() Stocks often tend to retrace a certain percentage within a trend before reversing again, and plotting horizontal lines at the classic Fibonacci ratios of 23.6%, 38.2% and 61.8% on a stock chart can reveal potential reversal levels. The Fibonacci retracement pattern can be used to help traders identify support and resistance levels, and therefore possible reversal levels on stock charts. You can also use tools such as CMC Markets' pattern recognition scanner to help you identify stocks that are showing potential technical trading signals. Apply these swing trading techniques to the stocks you're most interested in to look for possible trade entry points. We've summarised five swing trade strategies below that you can use to identify trading opportunities and manage your trades from start to finish. It's important to be aware of the typical timeframe that swing trades unfold over so that you can effectively monitor your trades and maximise the potential for your trades to be profitable. The estimated timeframe for this stock swing trade is approximately one week. The stop loss level and exit point don't have to remain at a set price level as they will be triggered when a certain technical set-up occurs, and this will depend on the type of swing trading strategy you are using. Any swing trading system should include these three key elements. The three most important points on the chart used in this example include the trade entry point (A), exit level (C) and stop loss (B). ![]() In this example we've shown a swing trade based on trading signals produced using a Fibonacci retracement. ![]() There are numerous strategies you can use to swing-trade stocks. Traders who swing-trade stocks find trading opportunities using a variety of technical indicators to identify patterns, trend direction and potential short-term changes in trend. Positions are typically held for one to six days, although some may last as long as a few weeks if the trade remains profitable. Swing traders will try to capture upswings and downswings in stock prices. Swing trading is a type of trading style that focuses on profiting off changing trends in price action over relatively short timeframes. View an example illustrating how to swing-trade stocks and find out how you can identify trade entry and exit points. Learn swing trading basics and gain valuable insights into five of the most popular swing trading techniques and strategies. ![]()
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