What is a swing failure pattern?

A Swing Failure Pattern (SFP) is a kind of reversal pattern in which a trader targets a stop-loss at a point below a swing high or above a swing low in an attempt to push the price in the reverse direction by creating the required liquidity. Using a swing trading pattern can help identify high-quality areas to trade.

What is RSI swing failure?

The relative strength index (RSI) swing failure is a great way to understand the SFP trading method. RSI is a technical indicator that reflects the historical and current positions of an asset relative to the current closing price. Failure swing pattern occurs when the price line and the RSI line split from one another.

Is swing failure a good indicator for a reversal?

Swing failure is known to be a strong indicator for a reversal to be used alone for trading decisions. As a rule of thumb, traders execute a trade following a trend; they also keep an eye on any early signs of trend reversals to avoid getting on the wrong side of the trend.

What is a swing in financial markets?

A swing can either refer to a type of trading strategy or a fluctuation in the value of an asset, liability, or account. A swing in the financial markets, which is caused by increased volatility, can be seen easily when the price of certain security undergoes a rapid, directional change in value.