← Back to lessons

Foundation · 7 min read

Read the sequence, not the last candle.

Use completed swings to separate an upward sequence, a downward sequence and a market that has stopped following either.

One question to answerWhen is a pullback different from a reversal?

The lesson on YouTube

Watch. Then work through the idea.

Watch the English lesson first, then use the worked example and quiz below to check the idea. The article is a companion, not a transcript.

Loading connects to YouTube and may transmit device data or use storage. Privacy details. Alternatively, watch on YouTube ↗.

What is actually happening?

A sequence of higher swing highs and higher swing lows describes an upward structure. A pullback moves against that sequence without yet breaking the chosen reference low. A reversal claim needs a defined change, not merely a red candle.

Keep the boundary clear. A chart observation does not reveal a participant’s identity, intention or future orders.

Guided example · Completed bars · two-left / two-right swing rule

When does a swing become known?

Confirm the reference before using it. Reveal the two right-side candles first.

Restart & example assumptions

Authored synthetic observations, shown in sequence. Every comparison uses only the revealed data. This is a worked learning example, not live prices, broker execution or a profitability backtest. Follow the article’s exact definitions; measurements and pattern names alone do not authorize a trade.

For charts: tap a candle or swing to inspect it; drag horizontally to browse; wheel or +/− to zoom; arrow keys to inspect; Home to restore the step view.

Make the conditions explicit.

01 / CONTEXT

Define a swing rule first. For example, a low with two completed candles on each side whose lows are higher. Such a swing is confirmed late; you cannot honestly mark it in real time before the right-side candles exist.

02 / TRIGGER

In a practice chart, mark the last confirmed swing low. Then reveal bars one at a time and identify the first completed close below your reference.

03 / CANCEL OR INVALIDATE

If price closes below the reference, stop describing that specific sequence as intact. A later reclaim is new evidence, not permission to rewrite the earlier break.

The quoted rules are illustrative research specifications. Parameters are not recommendations and have not been presented as profitable backtest results.

What can this cost?

The structure boundary and your executable stop are not identical by default. A close-based rule can observe prices beyond a stop placed under the swing.

Calculate the size from your assumptions

How the idea can fail.

Small swings in a sideways market produce frequent apparent breaks. A higher low on a five-minute chart can coexist with a downtrend on a daily chart.

Practical habit

Keep the timeframe and swing rule written beside your chart. Do not change either after seeing the outcome.

Go one level deeper

Record signal availability time, not just the timestamp of the eventual swing low. This prevents look-ahead bias in replay tests.

Check your understanding

When can a swing with two right-side candles be confirmed?

Choose one answer

Further reading & boundaries

These examples are original educational exercises. General background: CME Group: position sizing; Fidelity: technical analysis. Neither endorses these example rules. No hypothetical result establishes future profitability.

Editorial revision: 13 October 2026 · Synthetic data · Educational use

Keep buildingRisk before entry