Taking forward from last post on Swing Charts…..

In swing charts, we draw up the swings that a market is making or the direction in which market is moving. [I use the word market more often. You may replace it with stock, contract, commodity, forex or any other instrument. It works on all]. If it was an UP day on bar chart, we will move up the line on SWING chart. Please see pictures below with explanations below them.



In the pic above, there are 2 charts, Bar Chart on the left hand side and Swing Chart on the right hand side. Swing chart is constructed based on Bar Chart. In the bar chart above, there are 5 bars drawn for 5 days with each chart numbered from 1 to 5 for each day.

In the Swing chart, there are 5 points numbered from 1 to 5. Each of these points represent the HIGH point of the corresponding day.

Please note the blue line drawn on Swing chart ending at point 1. What we have done is, we have drawn a straight line up, till the High of the Day 1 on Bar Chart.

Now see the red line in SWING chart ending at point 2. This line is drawn up to the HIGH of Day 2. We have moved up the same line on SWING chart because Day 2 was an UP day. We have not drawn an other line on SWING chart but extended the same line UP. Different color has been used to illustrate the extension of the line on SWING chart.

Points 3, 4 and 5 represent the HIGHs of corresponding days and colors of the line represent the movement of the line UP to the HIGH of corresponding day on SWING CHART.

Point 0 to Point 5 on SWING chart is ONE swing because the market has not witnessed a LOW day yet.

Now look at Pic 2 below:



We observe that Day 6 was a LOW day, because the HIGH AND LOW of Day 6, were lower than the HIGH AND LOW of Day 5 respectively. We now move down our SWING chart down from point 5 to point 6.

Point 6 and 7 represent the LOW of Day 6 and Day 7 respectively.

Similarly, since Day 7 was a LOW day as well, we move down the SWING chart to point 7. Point 5 to point 7 represent another SWING, this time DOWN Swing.

You may go through the Bar Chart and Swing Chart for NIFTY for last couple of months provided below and notice how the Bar and SWING chart look for the same period.