MMXM Mentorship Episode 5: Daily Swing High and Lows

Daily Swing Highs and Lows in Trading

Understanding Swing Highs and Lows

• Every market turning point creates a swing high or low, which may seem insignificant on lower time frames but is crucial when viewed on a daily chart.

• A swing low consists of three candles: the middle candle has a lower close than the two adjacent candles, which are higher.

• Conversely, a swing high is identified when the middle candle closes higher than its left neighbor (lower) and right neighbor (lower).

Trading Strategies with Daily Swing Patterns

• For bullish trades, look for swing lows at discount levels; for bearish trades, seek swing highs at premium levels after running previous swings.

• Focus on day four following a three-day swing bar pattern to identify potential price movements towards previous daily highs or lows.

Analyzing Price Movements

• If the fourth day's body closes above (bullish) or below (bearish), aim for previous daily highs/lows if liquidity remains intact.

• This model can yield one high-probability trade per week across multiple pairs, sufficient for consistent trading success.

Practical Application with Crude Oil Futures

• The crude oil futures chart illustrates how significant candles often occur on day four after forming a swing pattern within volume imbalances.

• Day four typically shows strong movement into draw liquidity; understanding open-high-low-close dynamics enhances trade setups.

Case Study: Euro British Pound Analysis

• In analyzing the Euro British Pound daily chart, focus on identifying key levels where swing lows form alongside fair value gaps.

Day Four Trading Strategy Overview

Focus on Day Number Four

• The strategy centers around day four, targeting the day three high due to its low resistance liquidity and the formation of a swing low at a key level, indicating bullish order flow is likely.

Liquidity and Market Structure

• Emphasis is placed on identifying failure swings that align with market structures. A rejection after running a low can signal potential setups for trading.

Daily Candle Dynamics

• The concept of the "power of three" is introduced, highlighting the daily candle's open, low, high, and close. The goal is to see a low form followed by upward movement towards draw liquidity.

Identifying Opportunities

• As price moves up towards drawn liquidity, traders should look for bullish order blocks and fair value gaps as entry points to go long while aiming for previous highs.

Analyzing US Dollar Index

• A review of the US dollar index chart shows a swing low forming at a key level. This analysis supports focusing on day four and five if draw liquidity remains intact.

Intraday Chart Analysis

Day One to Three Review

• Observations from days one through three indicate that traders should look for swing lows at key levels before concentrating efforts on day four strategies.

Low Resistance Liquidity Focus

• Traders are encouraged to identify areas with low resistance liquidity characterized by failure swings. This sets up opportunities in buy-side movements within the market structure.

Entry Models and Targeting Highs