How to set up Swing Trading Charts

Swing trading charts have a clear set up structure.

The higher time frame dominates. Always remember that.

Although we are looking for short-term moves, the type of price action we are looking for, those with the highest probability are in the direction of the longer term trend.

The question then is, how do you determine the longer term trend? There are two simple methods that you can apply quickly:

  • The 200 day simple moving average on the daily chart.
  • The monthly chart.

You do not want to make this step complicated but you do want it to be structured.

Click on each chart for a better view.

spy 200sma

spy monthly

Next up is the intermediate trend; the one we are looking to be in sync with the longer term idea. Generally you are looking for the most recent quarter or three months to be obvious.

In the following examples we see that Apple Inc is not obvious, as a matter of fact it is forming what is known as a “pennant,” which means it is consolidating without obvious order flow.

aapl swing trade

The second chart of Tesla is clear that buyers are in charge for the last few months.

tsla swing trade

Finally you have your “timing’ chart.

For a swing trader this can be a daily chart or an hourly chart, this depends on how much time you can spend at your screen logged into your account.

If you have a full-time job and cannot watch intraday in my opinion you should be using the daily chart points for entries and exits. you do not want to put yourself in a position to need to place an order and have your day job prevent that from happening.

The following two short-term charts of Goldman Sachs illustrates the same time period; the first the daily, the send the hourly. You can time swing trade entries on either one.

gs daily

Goldman Sachs hourly.

gs hourly

What you have just learned is called multiple time frame analysis. Start with the higher time frame and work your way down for high probability swing trade ideas.

Have a great day!

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