Swing highs and lows can be used by traders to identify possible areas of , which can then be used to determine optimal positions for stop-loss or profit target orders. If an indicator fails to create a new swing high while the price of the security does reach a new high, there is a divergence between price and indicator, which could be a signal that the trend is reversing.
Swing highs and swing lows are earlier market turning points. Hence, they are natural choices for projecting levels. Every swing point is a potential support or . However, for effective trading, focus on major swing highs and lows.
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