Direct answer: identifying highs and lows in forex
In forex, “highs” and “lows” are points where price turns within a chart’s visible structure. For the swing-highs-and-lows view, a swing high is a local maximum, and a swing low is a local minimum, identified using the candles/bars around them rather than a single tick.
A practical approach is to mark a point only when it is higher (for highs) or lower (for lows) than nearby, comparable candles on both sides, using a consistent lookback window and a clear definition of “nearby.”
How it works: definitions and a consistent method
Swing high (high)
A swing high is typically identified as a candle/bar whose high is higher than the highs of the candles/bars immediately before and after it, within a chosen window.
Key implementation choices:
- Choose the reference: Use the candle’s high price for highs and the low price for lows (not the close).
- Choose a window: “Nearby” can be defined as a fixed number of bars on the left and right. Larger windows produce fewer, more “structural” swings; smaller windows produce more swings.
- Use a clear comparison rule: For example, require the swing candidate to be strictly higher than each comparison bar’s high (or allow equal highs if your method supports it).
Swing low (low)
A swing low is typically the mirror image: a candle/bar whose low is lower than the lows of the candles/bars immediately before and after it, within the same window and with the same comparison rule.
What “identification” means in real charts
You cannot fully know a swing point until you can see price on the right side of the candidate. That means swing labeling is usually delayed: the point becomes clearer after subsequent candles either confirm it (by moving away) or invalidate it (by creating a higher high / lower low).
Example checks: ways to verify a marked swing
Use these independent checks to reduce ambiguity when marking swing highs and lows:
- Neighbour comparison: After you mark a candidate high, verify it is higher than the highs in your chosen left/right window. Do the same for a low using lows.
- Sequence logic: Swing points should alternate in a reasonable way (high then low then high, etc.). If the chart shows multiple highs without an intervening low, your definition or window may be inconsistent.
- Structure visibility: Compare the marked swing to the previous and next visible extremes. A swing point that is only slightly different from neighbours often becomes unstable under a different window.
- Re-check after new bars: If you redraw with the same rules later (with more candles visible), some earlier swing labels may shift. This is not “error” in the concept; it reflects how turning points are defined using surrounding data.
Limitations and risks (what you should not assume)
- Subjectivity from window choice: Different window sizes can produce different swing maps. A “structural” swing depends on your definition of nearby bars.
- Non-confirmation risk: A candidate swing high or low can be invalidated if price extends beyond it before your right-side window ends.
- No guaranteed outcome: Identifying highs and lows describes past turning points on a chart; it does not, by itself, imply future movement.
- Changing labels over time: As more price data appears, swing identification can be repopulated or revised, because the right-side evidence becomes available.
- Practical uncertainty: In fast markets and during range-bound periods, highs and lows can cluster closely, making exact labeling sensitive to the comparison rule (strict vs. non-strict) and the chosen window.