Swing Trading Strategies That Work (Updated)

In this post we’ll take a look at the most common swing trading strategies which have proven themselves over thousands of trades.

What is the EMA Crossover?

A commonly used swing trading method is the Exponential Moving Averages (EMA) crossover strategy. The EMA crossover is perhaps the simplest strategy; it requires two EMA lines.

How to Use the Average True Range (ATR) for Stop Loss

To set our stop-loss, we will use the Average True Range (ATR), a standard measure of volatility, that can easily be viewed on charts. A cautious stop will be 100% of the ATR, in pips, above or below the 50 EMA.

How to Use Fibonacci Retracement for Swing Trading

The Fibonacci retracement strategy is based on the Fibonacci sequence of numbers in which each new number is the sum of the previous two. The sequence therefore begins – 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 etc.

Continuation Pattern Strategies

So with this strategy, we will look for continuation patterns, such as flags, pennants, triangles, and cup and handle. It’s important to understand, though, that as swing traders we will be looking for sharp pullbacks, because the stronger the move into support or resistance levels, the stronger the reversal is likely to be.

Bull Pennant Trading Strategy

So in the example below, from the EUR/GBP daily chart, we can see that the swing high was followed by two strong bearish candles and then a doji indicating indecision. The next candle is a bearish inverted hammer, with a long upward wick, which evidences a false breakout.

Cup and Handle Chart Pattern

To identify a cup and handle pattern, we will look for a swing high forming the left rim of the cup, followed by a pullback into a flat or gently curving bottom before price recovers to form a second swing high – the right rim of the cup.

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