There are many types of trading, and one of them is swing trading. Swing trading enables traders to capture short-term to medium-term gains in the stock (or other financial assets) over a period of a few days to weeks.
In this blog, we’ve mentioned the three best swing trading patterns.. Let’s begin!
Top 3 Best Swing Trading Patterns in 2024
Here are the three best swing trading patterns in 2024. You can also take a course on stock market trading strategy from Upsurge.club to gain more understanding.
1. Head and Shoulder Pattern
The Head and Shoulders (H&S) pattern is another popular chart pattern used by swing traders to determine potential trend reversals from an uptrend to a downtrend.
The H&S pattern consists of three peaks: middle (the highest point) with two smaller shoulders (left shoulder and right shoulder) on both sides. The lows between the head and shoulders (known as the neckline).
When the price decisively breaks below the neckline, this is an indication of a potential downtrend. Hence, traders should enter long positions (sell). Moreover, you can even put the stop-loss above the neckline to mitigate potential losses in case the price suddenly upsurges.
2. Inverted Head and Shoulders Pattern
Opposite to the regular H&S pattern, the Inverse Head and Shoulders is another popular swing trading pattern that gives a bullish signal, going from a downtrend to an uptrend.
Inverted H&S includes three points: a low point (head) in the middle and two higher lows (shoulders) on both sides. Connecting the swing lows between head and shoulders may form a neckline.
When you identify a decisive break above the neckline, it is a clear indication of a bullish reversal. This is probably the best time to enter a long position (purchase).
You can also put the stop-loss orders below the neckline to mitigate potential losses if they suddenly drop below the support levels.
3. Double Top/Bottom Pattern
Double Top/Bottom is a trend reversal pattern. A double top suggests a potential upside momentum in an uptrend, while a double bottom suggests purchasing pressure emerging after a downward momentum.
Double Top includes two consecutive highs at approximately the same levels and has a price through (neckline) in between. In contrast, Double Bottom encompasses two consecutive lows at approximately the same levels and has a price through (neckline) in between.
Double Top suggests entering short positions (sell) for the confirmed break below the neckline, as it indicates a potential downside move. However, Double Bottom suggests entering a long position (buy) on the breakout above the neckline, as it indicates a potential uptrend continuation. Resources like VectorVest can help traders monitor such patterns and make timely decisions.
You may also put stop-loss above the neckline for double bottom and below the neckline for double top to mitigate the risk involved.
Conclusion
Swing trading patterns allow potential traders to identify the right trend and make informed trading decisions. Upsurge.club offers the best swing trading course that can help you master all the essential trading patterns and generate higher returns.
0 Comments