As of 04/12/2024
  Indus: 37,983 -475.84 -1.2%  
  Trans: 15,498 -250.79 -1.6%  
  Utils: 855 -6.47 -0.8%  
  Nasdaq: 16,175 -267.11 -1.6%  
  S&P 500: 5,123 -75.65 -1.5%  
YTD
 +0.8%  
-2.5%  
-3.0%  
 +7.8%  
 +7.4%  
  Targets    Overview: 04/12/2024  
  Up arrow39,800 or 37,700 by 05/01/2024
  Up arrow16,200 or 15,000 by 05/01/2024
  Up arrow885 or 850 by 05/01/2024
  Up arrow16,700 or 15,800 by 05/01/2024
  Up arrow5,250 or 5,025 by 05/01/2024
As of 04/12/2024
  Indus: 37,983 -475.84 -1.2%  
  Trans: 15,498 -250.79 -1.6%  
  Utils: 855 -6.47 -0.8%  
  Nasdaq: 16,175 -267.11 -1.6%  
  S&P 500: 5,123 -75.65 -1.5%  
YTD
 +0.8%  
-2.5%  
-3.0%  
 +7.8%  
 +7.4%  
  Targets    Overview: 04/12/2024  
  Up arrow39,800 or 37,700 by 05/01/2024
  Up arrow16,200 or 15,000 by 05/01/2024
  Up arrow885 or 850 by 05/01/2024
  Up arrow16,700 or 15,800 by 05/01/2024
  Up arrow5,250 or 5,025 by 05/01/2024

Bulkowski on Failure Swings

My book, Trading BasicsTrading Basics: Evolution of a Trader book., pictured on the left, discusses failure swings starting on page 90 in the section titled, "7. Good Eggs: Indicator Failure Swings."

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

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Failure swings are chart patterns that appear on indicator lines. They are small M or W shaped patterns that reliably signal short-term price turning points.

M-shaped Failure Swings
W-shaped Failure Swings
See Also

 

Failure Swings: M-Shaped

M-shaped failure swings

Look for M-shaped failure swings that span the trigger line in the indicator. The chart to the right shows the Wilder relative strength index (RSI) with the failure swing spanning the 70 overbought signal line (the horizontal line at 70).

The stock begins its turn as the failure swing forms. Notice that the second peak of the failure swing doesn't rise above the first peak. It fails to swing higher, indicating a weakening technical picture and a potential trend change.

The example pictured is taken from an actual stock/indicator pair. Various shapes for the failure swing appear to the left in the chart. Some analysts argue that the failure swing must span the trigger line (70), but you can find numerous examples where that is not the case and yet price changes trend. Failure swings occur in indicators other than the RSI, too.

Top of page More

Failure Swings: W-Shaped

W-shaped failure swings

Look for W-shaped failure swings that span the trigger line in the indicator. The picture to the right shows the Wilder relative strength index ( RSI) with the failure swing spanning the oversold signal line (the horizontal line at 30).

The stock begins its turn as the failure swing forms. The example shown in the chart is taken from an actual stock/indicator pair. Various shapes for the failure swing appear to the left.

Some analysts argue that the failure swing must span the trigger line (30), but you can find numerous examples where that is not the case and yet price changes trend. Failure swings also occur in indicators other than the RSI.

-- Thomas Bulkowski

Top of page More

See Also

 

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