Swing High / Swing Low
A local high or low surrounded by lower (or higher) candles on both sides.
A swing high is a candle whose high is higher than the candles immediately before and after it. A swing low is the opposite: a low that sits below its direct neighbours.
These points are the building blocks of structure reading: connecting successive swing highs and swing lows is how you determine whether the market is bullish, bearish, or ranging.
The strict three-candle definition (a middle candle higher than both neighbours) is a useful starting point, but it produces a great many meaningless swing points. In practice many traders use a wider window — five candles, with the middle one dominating the two on each side — to keep only the pivots that actually structure the move.
How to spot them without drowning: the question to ask is not "is this candle higher than its neighbours?" but "did price visibly react here?". A useful swing point is one that caused a clean reversal, not a one-candle hesitation. A quick test: zoom out. The swing points still visible when zoomed out are the ones that matter.
How to use them? They do three jobs at once. First, reading structure, by connecting successive pivots. Second, placing stops: a short stop goes above a swing high, never in empty space. Third, locating liquidity — other traders’ stop orders pile up just beyond those same pivots, which makes them targets for the market.
The classic mistake: treating all swing points as equivalent. A pivot formed on a wide-range candle at the New York open with a sharp rejection has nothing in common with a pivot formed in the Asian session inside a narrow range. The first will structure the market for days; the second is forgotten within the hour.
Second trap: redrawing swing points after the fact. A pivot is only confirmed once the following candle has closed. Marking a swing high on the live candle means telling yourself a story that can be invalidated minutes later — and it is the most common source of hindsight bias in a trading journal.