How to trade with the Swing Index Indicator?  

The Swing Index indicator can help you determine the trend’s direction through crossovers. 

When the Swing Index crosses above zero, it signals an uptrend. Here, you can take buy positions. Conversely, when the SI crosses below zero, it’s a sign of a downtrend, and you can take sell positions. 

Swing Index Indicator trade setup

The second way to trade with the Swing Index is by finding divergences. The price makes higher highs in the bearish divergences, but the indicator makes lower highs. It means a weakening of bullish momentum, and there is a possibility of a trend reversal. 

Conversely, the price makes lower lows in bullish divergences, and the Swing Index makes higher lows. It mentions a weakening bearish momentum and a chance of trend reversal. 

The chart below shows that when the price made a lower low, and the Swing Index made a higher low, the price reversed. 

Swing Index Indicator trade setup

The Swing Index can also help in determining short-term breakouts. An upward breakout occurs when the SI exceeds its value from the previous highest point.  On the other hand, a downward breakout appears when the SI falls below the previous lowest point. 

If you want to confirm the breakouts, you can do that by comparing the trendlines on the SI to the trendlines on the chart. As you can see on the chart below, we have similar trendlines on the chart and the Swing Index. 

When the trendline on the chart doesn’t match the trendline on the Swing Index, we have a false breakout.