Swing low is one of the terms we usually see in technical analysis. It refers to the point reached by an indicator or security’s price in a specific period of time. Usually, the duration is less than 20 trading periods.
This low is usually created if there is a low lower than the other surrounding prices in a specific period of time. This is the opposite of swing high. Swing high and swing low can identify trading strategies, market volatility, and trend directions.
The Detail Definition
This low represents the relatively low level of a certain period of time in price action. In a daily chart, on the other hand, this low will be the lowest price during the current month.
Swing trading is closely associated with these lows. These traders usually work on various time frames. Within that time frame, the lows will represent the lowest price from those frames.
Traders still need to observe the lowest price since the price within that frame always fluctuates. Yet, the typical lows are obvious, even the casual observer will notice them.
The Function
Swing highs and lows can help traders decide the trends. A series of rising swing highs and lows show that the upward (bullish) trend will stay. Yet, once there is one of the lows or highs breaks the pattern, then that is a signal that a trend change may occur.
On the other hand, there is a downtrend if traders see a series of swing lows of the security price. There will be a change of trend if there are higher lows.
Other than that, these lows can also be significant for a trader who takes a long position. These lows can also help traders to decide the position of a stop-loss order.
