Description
The Price Swing strategy is a swing trading technical indicator introduced by Domenico D'Errico. This strategy adds entry and exit simulated orders when a swing (a rapid price move of either direction) of a specified type is detected.
The strategy recognizes four types of swing:
- Pivot High-Low. This is a basic pivot point detection method: an upswing is detected if the low price first falls below its previous value, but then rises. Conditions for the downswing are vice versa, based on the high price.
- Bollinger Bands® crossover. An upswing is detected if the price crosses above the lower plot of the Bollinger Bands®. A downswing is detected when the price crosses below the upper plot of the Bollinger Bands®.
- RSI Crossover. An upswing is detected if the RSI crosses above the oversold level (which is set by default to 40). A downswing is detected when it crosses below the overbought level (the default value is 60).
- RSI + Higher Low/Lower High. An upswing is detected if the current low price is greater than its previous value while the RSI is below oversold. A downswing is detected if the current high price is less than its previous value while the RSI is above overbought.
The strategy adds a simulated buy-to-open order every time the upswing is detected. Sell-to-open simulated orders are added at downswings. Exits are provided when a specified period of time elapses, which defaults to 20 bars.
Input Parameters
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Parameter |
Description |
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Defines the type of swing to be looked for on chart. |
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Defines the length with which the Bollinger Bands® and the RSI will be calculated. |
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Defines the time period, completing which will have the strategy add a matching simulated exit order. |
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Defines the deviation multiplier for the Bollinger Bands®. |
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Defines the overbought level. |
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Defines the oversold level. |
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Defines the average type for the calculation of the Bollinger Bands® and the RSI. |
Bollinger Bands® is a registered trademark of John Bollinger.
Further Reading
1. "Detecting Swings" by Domenico D’Errico. Technical Analysis of Stocks & Commodities, May 2017.