Introduction
In this lesson, we’re going to break down protected swings, also called protected highs and lows, and how you can use them to anticipate market direction, refine entries, and maintain strong risk-to-reward.
What is a Protected Swing?
A protected swing is a high or low you expect to hold if the current trend continues.
- Bullish: You expect a recent low to remain intact while price trends higher.
- Bearish: You expect a recent high to remain intact while price trends lower.
There are two types of protected swings. Those created from fair value gaps and those created from sweeping highs and lows.
Highs and Lows:
- In bullish conditions, price runs below a short-term low (liquidity sweep), then closes above the series of down-close candles that formed that low.
- In bearish conditions, price runs above a short-term high, then closes below the series of up-close candles that formed that high.
Fair Value Gaps:
- Price trades into a fair value gap, then closes above the series of candles that created the low (bullish) or high (bearish).
This confirms the swing as “protected,” meaning it should hold if the trend continues.
Why Do They Matter?
Protected swings give you market structure points that:
- Define trend continuation
- Provide clear invalidation levels for stop placement
- Help avoid false reversals
- Guide trade direction (only trading in the direction of protected swings)
Examples in Action
Reversal to Bearish Trend
In one scenario, price swept a previous day’s highs but failed to close below the up-close candle series, no protected high formed.
Later, price swept the high again and closed below the series of up-close candles. This confirmed a protected high, flipping the market to bearish. From there, any retracement into key levels was an opportunity to sell, with the protected high as the invalidation.
Pro Tip: Pair protected swings with higher timeframe closures for extra confirmation.
Pro Tip: If you don’t think price will retrace to give an entry, refine your entry using a lower timeframe model.
Reversal Using Protected High
Continuation Using Protected High
Once a protected high is in place, each subsequent reach into an important level and close below an up-close candle series creates new protected highs.
These become stepping stones for continuation entries.
Refining on Lower Timeframes
If the hourly chart shows a protected swing formation, you can now wait for price to retest the opening price in the series. Upon retest of the level drop to the 5-minute chart to:
- Look for a lower timeframe protected swing (CISD)
- Enter on a continuation entry
Example: On the 1-hour chart, price swept a high into a fair value gap and closed below the up-close candles. Upon retest of the level, drop to the 5-minute chart and look for a reach into a fvg or sweep of a high. Wait for a closure below the opening price in the series of candles that made the high into the level. Enter short with stop on the protected high
This formed a protected high, allowing for a short with a stop right above it, achieving a clean 2R before reaching the projected target.
Pro Tip: Use lower timeframe protected swings to target higher timeframe targets for the best R:R.
Pro Tip: Refine your stop loss by finding closer protected swings following the CISD.
Anticipation vs. Confirmation
You can anticipate a protected swing forming at a key level (e.g., inside a fair value gap), but you only confirm it when the candle closes through the correct series.
This allows for lower time frame entries in alignment with the daily narrative.
Example:
If the hourly chart shows a potential protected swing forming, you can drop to the 5-minute chart to:
- Look for a lower timeframe protected swing (CISD)
- Enter closer to invalidation for better R:R
This is more risky as the higher timeframe protected swing has not been validated, thus the trend has not yet shifted.
Key Takeaways for Trading Protected Swings
- Always wait for the close beyond the correct candle series for confirmation.
- Use them as invalidation, stops go beyond the protected swing.
- In trending price action sell from protected highs in bearish markets and buy from protected lows in bullish markets.
- You don’t need to catch the exact reversal, protected swings can be traded on continuation setups as well.
Final Thoughts
Protected swings are one of the most importnat tools in my trading toolkit. They not only keep me aligned with the trend but also provide precise entries. Whether you’re targeting reversals or continuations, tracking protected swings keeps your trading disciplined and structure-focused.
