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Failure Swing

What is a Failure Swing?

This indicator movement is seen around overbought or oversold levels. It indicates if a trend is getting weaker or is going to reverse soon. These signals can also help to help evaluate other signals. And looks the same as a trend reversal on a price chart.

A failure swing in an up trend

A low (trough) below the oversold level,
followed by a peak that does not cross the overbought level,
and a second low (trough) that is higher than the previous one.
If the indicator rises above the high (peak) created by the indicator between the two low points, then this is a Failure Swing.

A failure swing in a down trend

A high (peak) above the overbought level,
followed by a trough that does not cross the oversold level,
and a second high (peak) that is lower than the previous one.
If the indicator falls below the low (trough) created by the indicator between the two high points, then this is a Failure Swing.

These signals are the strongest when the second peak or trough is between the overbought and oversold levels.

Example

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