Swing Double

posted in: Technical Analysis | 0

I define a Swing Double as a set of 3 basic waves. First an initial impulse wave(A). Second a corrective wave(B), followed by another impulse wave(C). The key is that the second impulse must be very close to or equal to the first (less than 10%).

a double swing
The Length of A Equals C
Quite often, a swing of this type marks the end of a price move. The Jan 2016 WTI Crude Oil chart is a great example. If you look at the move from November 14th at $42.20 (A) to November 22nd at $49.20 (B), the difference is exactly $7.00. If you add that to the low on November 25th at $44.82 (C) you get $51.82. The high of $52.42 is pretty close (I look for less than 10% of the previous swing).
swing double example
Jan 2017 WTI Crude Oil

I find these types of patterns very common in charts of all time frames. While I would not base a system on the Swing Double concept, it is a great way to identify market opportunities and get an edge on other traders.