The Best Indicators for Swing Trading: 5 Technical Analysis Tools to Use

Market swings can present profitable opportunities, even to new investors. However, it depends on how you interpret available data. Luckily, you can rely on swing trading indicators to help you make the right trading decisions.

Through swing trading indicators, you can identify entry and exit points. In addition, you’ll know what stocks can potentially increase in value. While they can provide good signals, it’s crucial that you understand how they work and what they mean.

So, if you’re curious about the best indicators for swing trading, read on! We’ll talk about some of the tools that should be on your radar.

What is Swing Trading?

In a nutshell, swing trading refers to a speculative strategy that helps in deciding whether you’ll buy, sell, or hold assets. It relies on expected price moves. Further, it leverages technical analysis for the identification of entry and exit points.

One of the most important things to note about swing trading is its timeframe. Investors turn to swing trading expecting short to medium-term gains. Hence, it often involves looking at a few days or weeks.

Swing trading has one major objective — capturing a chunk of the price move. Those who use it might look for more volatile stocks. On the other hand, some might also prefer sedate stocks.

Aside from using technical analysis, swing traders can also rely on fundamental analysis. The latter considers price patterns and trends that can help in making better trading decisions.

How Swing Trading Works

One of the most important parts of swing trading is technical analysis. It analyzes trading activity patterns. Further, swing trading capitalizes on the momentum and movements of asset prices.

Under this trading technique, investors look for signals. When the indicators are pointing upward, the trend is positive. Consequently, an indicator pointing downward is a negative trend. The time frame can range from one day to several weeks.

More so, swing traders look for two things. First, they look at swing highs. It happens when a market peaks before retracing. Hence, it’s an opportunity for short trading. Second, they also look for swing lows. It happens when the market is low and bounces. As a result, it’s an opportunity for long trading.

Lastly, an understanding of how swing trading works requires looking at its holding position time. As mentioned, it can be one night or several weeks. This is also what differentiates it from day trading. With the latter, the holding time is only a few minutes or before the closing of the market.

What is a Swing Trading Indicator?

Now that you have an overview of what swing trading is and how it works, it’s time that we talk about swing trading indicators. Basically, it’s a technical analysis tool for the identification of new opportunities. The indicators are for determining momentum. In turn, you’ll know the highs and lows.

Investors use different types of swing indicators. On the top of the list is a trend indicator. As the name implies, it shows the direction in which the market is potentially heading. It’s often for smoothening price volatility. Moving averages are among the best technical indicators for swing trading under this category.

More so, you can also use momentum indicators. It indicates the strength of a trend. Further, it also signals if a reversal can happen anytime soon. Plus, it can show overbought and oversold levels.

Lastly, volume indicators are also common. It indicates the volume of buys and sells within a specific period.

What are Swing Trading Indicators?

Are you searching for the best indicator for swing trading? Don’t look far. The last section of this guide looks at the top indicators you can use. If you’re a new trader, pay attention to the simplicity of the indicator. Look for one that can give an accurate snapshot of the market without too many complications.

Your choice of indicator can make or break your trading game. Hence, it’s crucial to identify the pros and cons of each strategy. Here’s a quick look at some of the best indicators for swing trading options.

In most cases, however, you can use not just one. Instead, you can rely on the best combination of indicators for swing trading. This way, you can gain more valuable insights.

Moving Averages

It’s perhaps the simplest option on this list. Also known as MA, it has been popular for decades used in trading commodities and shares. It calculates an asset’s price movement over a certain time.

Moving averages have two main categories. The first is the Simple Moving Average (SMA). It looks at average closing prices. On the other hand, the Exponential Moving Average (EMA) considers the most recent price instead of the average over time.


The premise is simple — high volume trading equates to a stronger performance compared to weak volumes. The more traders are buying and selling, the more solid the basis is for the price action.

One of the best ways to use volume is in a breakout strategy. If a high volume accompanies a breakout, a new substantial trend could potentially be on the way.

Ease of Movement

Using this indicator looks at volume while also relating it to price action. As a result, you can identify if low trading volumes drive the market. It plots in a chart using zero as the baseline. When it rises above zero, it can be a sign of the price advancing.

Relative Strength Index

One of the most popular types of momentum indicators, the relative strength index is especially popular among crypto traders. It identifies overbought and oversold stocks based on the price change magnitude. A higher number on a chart means it’s overbought. Meanwhile, a lower number shows it’s oversold.

Stochastic Oscillator

Last on our list of the best indicators for swing trading is the stochastic oscillator. It’s also a type of momentum indicator. While it’s very much like the relative strength index, the main difference is that it uses another type of mathematical model. The chart has two lines, including a three-day moving average. Two lines crossing indicates a reversal.


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