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Failure Swing Patterns

Identifying trend reversals at an early stage

Failure, Swing, Patterns, Trend Following, strategy, Technical Analysis, fx trader, forex

This article shows how to use Failure Swing Patterns in a Trend Following strategy and explains why these technical analysis patterns are among the most reliable graphical tools to identify trend reversals at an early stage.

In my last article published in FX Trader Magazine, ‘Trend Following – One more Step to Success’’, I shared my trading strategy. The article explained that it is absolutely imperative to have a trading strategy as it will allow you to better manage your trading expectations, as well as help you to develop your trading plan. We also said that even though traders using this trading strategy will often enter the market after a trend is well established, we took a step further and tried to spot new developing trends in their early stage. We underlined the fact that one of the methods to identify a weakness in the trend, as well as the possibility of the selected instrument to get into a consolidation phase, or even to reverse the current trend, is by using the Failure Swing patterns.

What is a Failure Swing Pattern

Failure swing patterns go back to the work of Charles H. Dow and his partner Edward Jones (Dow Jones & Company since 1882) back in the end of 19th century. The last tenet of the Dow Theory states that ‘Trend Remains In Effect Until Clear Reversal Occurs’. 

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