Trendlines, Swing Highs and Swing Lows
A trendline connects selected swing points to summarize direction. A swing high is a locally high observation and a swing low is a locally low one under a stated comparison rule.
How it works
One simple rule defines a pivot high as higher than the two bars on each side. Such a pivot cannot be confirmed until two later bars close. Connecting confirmed lows in an uptrend can provide a reference slope, but connecting two points does not establish a reliable trading rule. Fix whether the line uses closes or extremes.
Worked example
A candidate high on Monday is above the preceding Thursday and Friday. Under a two-bars-on-each-side rule, it is not confirmed until Wednesday’s bar completes. A backtest that enters on Monday using that confirmed pivot has used future information. If later closes fall through a line connecting lows at 100 and 104, record the break using the line as originally drawn.
Amounts, prices and scenarios are fictional teaching examples. They exclude any effects not explicitly stated and are not trade recommendations.
Limits and common mistakes
Trendlines depend on point choice and axis scale. A break may reflect sideways movement rather than reversal. Avoid redrawing only losing examples, and distinguish an observable event from an assumed explanation for it.
Knowledge check
When is a two-right-bar pivot known?
Read the explanation
Only after both following bars finish. Any rule using that pivot must account for this confirmation delay.
References and further reading
These sources explain the underlying concepts and specifications. They do not endorse QBMFX Academy. Check the relevant market, protocol version and reporting rules before applying an example.