Best Forex Swing Trading Signals for 2022
If you are one of the Forex traders practicing swing forex trading technique you are surely interested in finding the best swing Forex trading signals. In this article we overview some of the best Forex swing trading signals in 2022. First, let’s see what swing trading is.
What is Swing Trading?
This trading style is based on the assumption that market prices almost never move in a straight line and that traders can find opportunities in minor variations. Swing traders focus on the points where the market changes direction, entering and exiting their trades at these so-called “swings.” Swing trading is short term trading of longer-term trends.
The swing Trading represents a trading style that is mainly used on medium and long term time horizons. This approach aims to take advantage of Forex or stock market movements or swings with open positions taken over several days or weeks.
What Are Forex Swing Trading Signals?
Every Forex trader wants to have help in their daily work
Every Forex trader wants to have help in their daily work. Forex swing trading signals could help you conduct Forex trading with better outcomes. Also, the Forex swing trading signals are a valuable tool to enhance your results and your Forex trading process.
Forex swing trading signals are a trigger to buy or sell a currency according to a set of previously established parameters. Swing trading signals are designed using the best criteria to determine the best entry and exit points in Forex to achieve a set profit target.
The best Forex swing trading signals – Oscillators and indicators
Indicators can be divided into two groups, those that precede the price and those that follow it. It will depend on when they give us a signal to enter or exit the market.
In summary, we can group them into two types of indicators: oscillators and trend indicators.
Technical indicators ahead of price are known as oscillators. These are the indicators that give us a signal to enter or exit the market before the price makes a move. In other words, they anticipate the price movement.
Price lagging technical indicators are usually indicators of the price trend. They are called trend indicators. Trend indicators give us a signal to enter or exit the market after the price has made a confirming move.
If we look at it schematically:
Advanced trading indicators: these are the oscillators.
Price Lagging Indicators: These are the trending indicators.
For some traders, leading indicators or oscillators are the best indicators for trading in the Forex market because they manage to give you a signal ahead of the price movement.
Sometimes the oscillator gives you a strong overbought signal and gives you a sell signal, but despite this, the price continues to rise and rise.
In order to avoid false signals, more than one oscillator indicator is often combined in trading strategies. In this way, as long as the two oscillators do not give a signal, no trade is carried out, which minimizes possible false signals.
Two of the most used and powerful oscillators are the stochastic and the RSI. Many strategies combine these two technical indicators. You can also combine these two tools in your swing trading strategies. Let’s see how they work.
The best Forex swing trading signals – Stochastic indicator
The stochastic indicator is one of the most used indicators by traders in the financial markets. Its operation is very easy to interpret and tells us when the price of a currency pair is overbought or oversold.
It is a leading indicator of the price because when it indicates that a currency pair is overbought or oversold, the stochastic alerts us that the price may change direction.
In other words, it anticipates possible changes in the price, and therefore, it provides us with trading opportunities.
The Stochastic indicator consists of two lines that move at the same time and interact with each other at any given time. Also, the indicator has an upper zone (overbought) and a lower zone (oversold).
When the two lines enter the lower zone, the stochastic gives us an oversold signal. In that case, we can buy the currency pair when the two lines cross on the upside breaking out of the oversold zone.
If both lines enter the upper zone, the stochastic tells us that the currency pair might be overbought. Then we can tell the pair when the two stochastic lines cross down, coming out of the overbought zone.
The two situations above are the two basic signals that the stochastic oscillator gives us. However, stochastics is also very useful with divergences.
If you perform your technical analysis using stochastics, you will often notice that the indicator goes up and the price goes down, or vice versa. These are bullish and bearish divergences.
If there is a bullish divergence between the price and the stochastic, we can anticipate a possible rise in the price. The opposite is true for bearish divergences.
The best Forex swing trading signals – RSI indicator
The RSI – relative strength index – is also one of the best stock market indicators. It’s one of the most used indicators by all traders in the world. It is similar to the Stochastic Oscillator in that it provides clues about overbought and oversold conditions, as well as divergences.
However, the RSI has only one line, which enters an upper and lower area of the indicator. These are the overbought and oversold areas.
How to interpret the RSI indicator ?
When the RSI indicator line enters the upper zone, usually above the 70 level, we get an overbought signal. It gives us the opportunity to sell the currency pair.
On the other hand, when the RSI line enters the lower zone, usually below 30, we get an oversold signal. We would then have a trading opportunity by buying this currency pair.
The divergences of the RSI work in the same way as those of the stochastic oscillator. Sometimes the high and low of the price and the RSI will diverge, giving us bullish and bearish divergences.
Bullish divergences are likely to predict possible upward moves, while bearish divergences indicate possible downward moves.
The best Forex swing trading signals – Trend indicators
These are lagging indicators because they give us the signal to invest after the price has already confirmed the move. In other words, these indicators act as a confirmation rather than a forecast.
That said, the main advantage of lagging indicators is that they will generally give you fewer false signals than leading indicators.
And their main disadvantage is that you will get the reversal signal later when the price has already started to move. So you will miss part of the price movement.
I will show you the most used trend indicators in the stock market: MACD, Bollinger Bands, ADX and Parabolic SAR.
The best Forex swing trading signals – MACD Indicator
In many traders’ opinions, the MACD is the best market indicator that exists. It’s one of the most widely used indicators in the Forex markets.
The MACD is an indicator that takes two moving averages of the price and then smooths them with two other moving averages.
In addition to the two moving averages in the indicator, there is also a histogram, which shows the difference (distance) between the two moving averages.
Like other trend indicators, the MACD has a relatively long time frame to generate reversal signals. Nevertheless, it is one of the most widely used and effective technical indicators.
Bollinger Bands are an indicator based on price volatility. It consists of an upper line or band, a lower line or band, and a simple moving average. The bands act as support and resistance in the price.
The simple moving average is often used as a market entry point. Although there are many variations in its use, depending on the strategy used.
When the two bands are closer, it means the currency pair is in a low volatility environment. When the bands start to widen, it means the currency pair is in a low volatility environment.
Swing trading is an alternative strategy for those who enjoy short-term trading but cannot dedicate hours to trading every day. Although this style of trading requires a good understanding of technical analysis, it can lead to more efficient returns than intraday trading.
As with any form of trading, there will be risks. Swing traders, especially those just starting out, need to ensure that they have a good understanding of technical indicators as well as market fundamentals to make their trading decisions.
A swing trader should also seriously consider having a stop loss in place in case breaking news affects the direction of the market in which they are positioned.
When it comes to swing Forex trading signals, some are free, and others require payment.
Many traders like to get swing Forex signals without paying. However, expert traders do not. Free Forex swing signals are of low quality and aren’t always reliable.
It is very important to consider contracting a swing signal service with a professional company to minimize the risks of getting inefficient information.