Technical Trading Tips and Techniques by 
Following is an excerpt from my book, Essentials of Foreign Exchange Trading (John Wiley & Sons, 2009) regarding swing trading methodology in the forex market:
“Swing trading allows traders to pinpoint precise, high-probability entries and exits for each and every trade, based soundly upon the technicals. A typical swing trade begins with a perception by the trader that a market turn might be in the midst of occurring. This perception could be fueled by a host of different triggers, whether it is an oscillator reaching severely overbought or oversold, a price-oscillator divergence occurring, a reversal chart pattern forming, a break of a trendline occurring, or price reaching a significant support/resistance level. Any or a combination of these events, or other technical indications, could trigger the trader’s perception that an impending turn could potentially occur.
Once the initial perception is triggered, the prudent swing trader immediately searches for confirmation. For example, if the initial perception is triggered by a divergence indication, the trader will check to see if any other patterns, support/resistance levels and/or oscillators are confirming an impending swing. If there is indeed confirmation, the experienced swing trader would then consider possible entries and exits (stop losses and profit targets) to determine if the trade is viable from a risk/reward perspective.”
- Excerpted from Essentials of Foreign Exchange Trading (John Wiley & Sons, 2009) by James Chen, CTA, CMT. Please click here for more information on this book.