The Swing Failure Pattern (SFP) is a type of reversal pattern that provides buy or sell signals based on the failure of the price to continue its trend.
What is a Swing Failure Pattern?
- Uptrend SFP: Occurs when the price fails to make a new high after a series of higher highs and higher lows, indicating a potential reversal to a downtrend.
- Downtrend SFP: Occurs when the price fails to make a new low after a series of lower lows and lower highs, indicating a potential reversal to an uptrend.
How to Use Swing Failure Patterns
- Identify Trend Reversals: SFPs can signal potential reversals in uptrends or downtrends, providing opportunities for traders to enter or exit positions.
- Confirm with Other Indicators: Use SFPs in conjunction with other technical indicators like MACD or RSI to confirm the reversal signals.
- Set Entry and Exit Points: Use SFPs to determine strategic entry and exit points, helping to maximize profit and minimize loss.