Swing Bias, Auto-Fibonacci, Swing Metrics, and Auto-Swing Pattern Finder NinjaTrader 7
This is the methodology of looking at the relationships of past swings to give insight into future swings. To help round out The Swing Toolkit, we included a custom ZigZag tool to allow additional analysis of swings.
For those who are not familiar with what a “ZigZag” indicator is, it’s merely a customizable tool to identify swings on a chart (given certain parameters). Once you identify the swings, there is so much you can learn from them!
ZigZag Tool
The ZigZag tool itself has two main parameters to define what constitutes a “swing”. One is the span of time, which is a bar count (to the left) that the high or low swing must break. For example, a setting of “5” would require that the swing must break the past 5 (or more) bars to the left to be valid.
The second option is a minimum span of price (in ticks) that the swing must be. For example, a setting of “10” means that even if a swing broke the high of the past 5 bars, if it’s not at least 10 ticks high, then it’s not valid and won’t be detected by the tool. Be careful when using this parameter and switching between time frames. A span of price for an intra-day chart may not make much sense on a higher time frame chart. Setting this value to “0” will disable this check.
Below is a simple ZigZag applied to a chart (without other indicators turned on), which helps to visualize the swings based on the specified parameters. Keep reading to see what interesting information we can glean from this information!
The second option is a minimum span of price (in ticks) that the swing must be. For example, a setting of “10” means that even if a swing broke the high of the past 5 bars, if it’s not at least 10 ticks high, then it’s not valid and won’t be detected by the tool. Be careful when using this parameter and switching between time frames. A span of price for an intra-day chart may not make much sense on a higher time frame chart. Setting this value to “0” will disable this check.
Below is a simple ZigZag applied to a chart (without other indicators turned on), which helps to visualize the swings based on the specified parameters. Keep reading to see what interesting information we can glean from this information!
Swing Bias
Looking for the Swing Bias for NinjaTrader 8?
NT8 VersionA common technical analysis adage is that a bullish bias requires higher highs and higher lows (or a bearish bias would have lower highs and lower lows). To make this analysis easier, the The Swing Toolkit includes a Swing Bias indicator. As you can see in the chart below (S&P (ES) daily chart), swings are identified as a continuation of the existing bias or indicating a possible bias change. Once a swing is broken, then the bias would change from bullish to bearish and a “red” block is drawn.
In the simplest terms, if the latest colored block is green (bullish), then you look to buy the dips. If the latest block is red (bearish), then you look to sell the rallies. The gray bars are merely the bars during a pullback, where you are looking for an entry into the existing trend.
Thus, when a pullback is happening, you are looking for a place to enter long within the range of the latest swing block. If price goes below that swing, then it would indicate a bias change. The location within that range is where we are looking for support/resistance using the other tools at our disposal, the Swing Pattern Finder and symmetry tools.
It’s easy to turn this feature on or off via the “bias” icon on the toolbar (up/down arrows). Within the parameters, you can turn the rectangles on/off and the colored bars on/off independently.
Note: A bias rectangle is not drawn until a bias is broken or continued. It’s not a tool for entry or trigger, but merely bias. The Swing Pattern Analyzer and Symmetry tools are used for finding support and resistance.
Auto-Fibonacci Retracements
Looking for the Auto-Fibonacci for NinjaTrader 8?
NT8 VersionSince, our ZigZag indicator tells us where all the swings are, it makes it easy to look at the various Fibonacci retracements/extensions between the swings.
The tool will also highlight known Fibonacci percentages in a user-defined color. Swings are rarely exact, so there is a customizable “fudge factor” for determining if a Fibonacci level is a match or not.
It’s easy to turn this feature on or off via the “FIB” icon on the toolbar.
Swing Metrics
Looking for the Swing Metrics for NinjaTrader 8?
NT8 VersionNot only can we look at the Fibonacci retracements, but we can also look at various metrics of each swing. The customizable choices include price change (points, ticks, and dollar amount (for futures)), the number of bars, the cumulative volume for that swing, and a summary of metrics over the entire chart (summary is in the top-left of the chart).
An additional feature is not only looking at the moves from high to low or low to high, but also from high to high or low to low! Be sure to look at the indicator parameters (in the ZigZag section) for additional metric options.
It’s easy to turn this feature on or off via the “metrics” icon on the toolbar (bar graph icon).
Auto-Swing Pattern Finder
Looking for the Auto-Swing Pattern Finder for NT8?
NT8 VersionAlso included in the Swing Toolkit is a tool to automatically find the most resent bearish and bullish formations (if any) on a chart. The swings are based on the swings defined by our ZigZag tool above.
Click here, for a continued discussion on the Auto-Finder tool.
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