Top Swing Trading Patterns to Know & How to Trade Them!

Jitanchandra Solanki
11 Min read

Swing trading is a popular style of trading the financial markets. Essentially, swing traders aim to trade the swings that can develop in the price of a security, usually on a higher timeframe such as the daily chart.  

Discover some of the top swing trading patterns to know below that can be used on stocks, forex, commodities, indices and other markets. You will also learn how to access a swing trading pattern screener that will scan thousands of markets for you!

Top swing trading patterns to know  

There are many types of chart patterns that are used by swing traders. Typically, these chart patterns are used in conjunction with swing trading indicators. Trading the financial market is about putting probabilities in your favour. Having enough tools in your trading arsenal is essential to swing trade successfully. 

Below are just a few of the top swing trading patterns to know: 

  1. Ascending triangle 
  2. Descending triangle 
  3. Range consolidations 
  4. Head and shoulders 
  5. Inverted head and shoulders 
  6. Double bottom  
  7. Double top 

Let’s take a look at the first few and explore how traders could trade them. You can also expand your trading knowledge by registering for your free spot on the Forex 101 trading course below. 

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The break and retest triangle pattern 

Triangle patterns include ascending, descending and symmetrical triangles. It is important for swing traders to have visible price levels to analyse if buyers or sellers could potentially turn up and drive the market in a particular direction.  

Ascending and descending triangle patterns are ideal as they provide horizontal levels of support and resistance. These are price levels that traders will use to identify potential turning points in the market.

1. Break and retest ascending triangle pattern  

An ascending triangle pattern is formed with at least: 

  • Two swing higher lows which create an ascending trend line 
  • Two swing highs rejecting the same price level creating a horizontal resistance line

The break and retest element is when the price breaks through the top of the ascending triangle pattern and then comes back down to retest the horizontal resistance line which could now turn into a horizontal support line.  

In strong trending markets, there is a chance that the price could break through the ascending triangle pattern and breakaway and not come back to retest. However, trading this is more challenging as it could result in a false breakout in a low-volatility market. 

Source: Admirals MetaTrader 5, AUDJPY, Daily - Data range: from 24 Jun 2021 to 16 May 2022. Captured on 7 Nov 2022. Please note: Past performance is not a reliable indicator of future performance. 

The example above is of the AUDJPY daily chart from MetaTrader 5. It shows an ascending triangle pattern in which the price has broken through the horizontal resistance line and retested (the green circle).  

The higher lows suggest bullish momentum is building and the break of resistance highlights the potential strength of buyers.  

Traders would typically look for more bullish clues at the retest of the horizontal line by analysing different indicators and price action patterns.

Stay up to date with the latest market analysis and trends by registering for your free spot on the Admirals live trading webinar series which occurs three times a week. 

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2. Break and retest descending triangle pattern  

A descending triangle pattern is formed with at least: 

  • Two swing lower highs which create a descending trend line 
  • Two swing lows rejecting the same price level creating a horizontal support line

The break and retest element is when the price breaks through the bottom of the descending triangle pattern and then comes back up to retest the horizontal support line which could now turn into a horizontal resistance line.  

In strong trending markets, there is a chance that the price could break through the descending triangle pattern and breakaway and not come back to retest. This can happen in a market condition that is a ‘sell-off’ rather than an actual downtrend. 

Source: Admirals MetaTrader 5, GBPAUD, Daily - Data range: from 17 Dec 2021 to 27 Oct 2022. Captured on 7 Nov 2022. Please note: Past performance is not a reliable indicator of future performance.

The example above is of the GBPAUD daily chart. It shows a descending triangle pattern in which the price has broken through the horizontal support line and retested (the green circle).  

The lower highs suggest bearish momentum is building and the break of support highlights the potential strength of sellers.  

In this example, the first breakout from the horizontal support line failed and was met with a strong reversal candlestick pattern known as a bullish engulfing. After this false breakout, the price did eventually break through and retested which led to a move lower.  

This highlights the importance of using other tools to build more probabilities on price moving in a certain direction, as well as risk management. For example, stop losses are essential to managing risk and controlling how much we could lose on a trade.

The MetaTrader 5 platform allows users to access multiple order types to ensure solid risk management. You can also view multiple timeframes and a large range of technical trading indicators. 

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The range consolidation pattern 

Markets do not trend all the time and, in fact, range trade more of the time. Therefore, swing traders may also consider adding techniques on trading ranges.  

A trading range or consolidation is a situation where price cycles have traded in between a horizontal resistance line and horizontal support line creating a rectangular chart pattern.  

A horizontal support and resistance line can only be identified once there are two price cycle rejections off the same price level.

Source: Admirals MetaTrader 5, EURCAD, Daily - Data range: from 24 May 2021 to 7 Nov 2022. Captured on 7 Nov 2022. Please note: Past performance is not a reliable indicator of future performance.

Once a range consolidation chart pattern has formed there are several methods to trade it. A few include the options to: 

  1. Trade within the range using reversion to the mean trading patterns. This involves trading price action at the top and bottom of the range in anticipation of a move towards the middle (or mean).
    1. Traders may opt to trade within the range and in line with the preceding trend. For example, if the preceding trend was down traders would only trade at the top of a range. If the preceding trend was up, traders would only trade at the bottom of the range.
  2. Wait for the price to break outside of the trading range and utilise either:
    1. Breakout trading strategies. This involves trading price as it breaks out of the trading range. This is more susceptible to false breakouts. 
    2. Break and retest strategies. This involves waiting for the price to retest the horizontal lines but may involve missing a breakout move.
Source: Admirals MetaTrader 5, EURCAD, Daily - Data range: from 24 May 2021 to 7 Nov 2022. Captured on 7 Nov 2022. Please note: Past performance is not a reliable indicator of future performance.

Test your trading skills


Does a chart pattern screener work?

With many different types of swing trading patterns, across thousands of markets and multiple timeframes, it can be very challenging to identify patterns to trade on. This is where a chart pattern screener could become useful.  

In the Admirals Premium Analytics section of the Traders Room, users get access to the Featured Ideas section. This provides trading ideas based on chart patterns that have formed on a selection of markets.  

It details what pattern was found, the market and the timeframe.

Source: Admirals Premium Analytics Featured Ideas, 7 November 2022 

Users can also use the Technical Insight Lookup indicator which allows you to search for technical events such as chart patterns that are developing on thousands of markets covering stocks, commodities, indices, currencies and more.

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How to use swing trading patterns with Admirals 

A great way to get started with swing trading chart patterns is to use a demo trading account. This allows you to trade in a virtual environment and hone your skill set of identifying patterns in real time.  

Trading in a virtual environment can help to build the confidence and skills required to eventually trade live. Open a free demo trading account below.

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FAQs on swing trading patterns

 

Which pattern is best for swing trading?

There are a variety of swing trading patterns which include ascending and descending triangle formations, range consolidations, head and shoulders patterns, and double top and double bottom patterns.

 

Is a 1-hour timeframe good for swing trading?

Swing trading is typically done on higher timeframes such as daily and weekly charts. However, traders could use the 1-hour timeframe to enter daily swing positions using multiple time frame trading strategies.

 

Is 4-hour chart good for swing trading?

Many traders would use the 4-hour chart to enter daily swing positions. Stock market cash sessions are usually open for 8 hours so the 4-hour chart has two bars for the day. There are six four hours bars in the forex market. 

 

About Admirals 

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today! 

INFORMATION ABOUT ANALYTICAL MATERIALS:   

  1. The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter “Analysis”) published on the websites of Admirals’ investment firms operating under the Admirals trademark (hereinafter “Admirals”) Before making any investment decisions please pay close attention to the following:   
  2. This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.    
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  4. With a view to protecting the interests of our clients and the objectivity of the Analysis, Admirals has established relevant internal procedures for the prevention and management of conflicts of interest. 
  5. The Analysis is prepared by an independent analyst, Jitanchandra Solanki (analyst), (hereinafter “Author”) based on their personal estimations.    
  6. Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admirals does not guarantee the accuracy or completeness of any information contained within the Analysis.    
  7. Any kind of past or modelled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admirals for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed. 
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