What is ICT Swing High: 2 Easy Steps + 2 Examples

An ICT Swing High is a concept used to identify points of resistance and potential reversal in the market.

It is defined as a local high point on the price chart where the central high is flanked by two lower highs on either side, forming a “swing.”

This structure signifies a temporary peak in price, which can either precede a reversal to the downside or serve as a level of resistance in an uptrend.

Swing highs are valuable to ICT traders because they represent areas where price has historically turned and may attract institutional interest, especially in markets manipulated by “smart money.” The primary application of identifying swing highs is to:

1. Detect potential resistance levels.
2. Establish stop-loss placement.
3. Time entries around price action confirmation.

1. Structure of an ICT Swing High

In a typical swing high:

• The central high (the peak) is the highest of the three.
• The two adjacent highs (on either side) are lower than the central high.

This formation represents a rejection from a higher price, signaling possible exhaustion of upward momentum.

1. Example of a Swing High:

Imagine price action on the EUR/USD chart:

1. Price rises to a high of 1.1300.
2. The next candle forms a slightly lower high at 1.1275.
3. The following candle forms another lower high at 1.1250.

In this case, 1.1300 is a swing high, marked by the three-bar formation.

2. Importance of Swing Highs in ICT

Swing highs play a crucial role in ICT trading as they:

1. Indicate Resistance Zones:

A swing high may act as a future resistance area. Institutional traders often observe these levels for liquidity.

Retail traders may place stop-losses above these highs, which institutions can target for liquidity.

2. Help Identify Trend Reversals:

When multiple swing highs occur consecutively without breaking higher, it signals a potential trend reversal.

3. Provide Stop Placement Guidance:

Traders entering short trades near a swing high often place stops just above it, as the swing high represents recent price rejection.

3. How to Use Swing Highs in ICT Strategy

1. Entry and Exit Strategies

Short Entry: Enter a short position after a swing high forms in a downtrend or near a resistance level.

For example, after spotting a swing high at 1.1300 on EUR/USD, wait for a bearish confirmation (e.g., bearish engulfing candle) and enter short around 1.1275.

Stop-Loss Placement: Place a stop-loss above the swing high, such as 1.1320, to protect against false breakouts.

Take-Profit Strategy: Target the next level of support or swing low.

2. Breakout and Liquidity Targeting

Institutions often target the liquidity above swing highs to collect retail stop orders before reversing the price.

If price moves strongly above a swing high, it may signal an institutional move, so traders can wait for a retracement before entering with the new trend.

4. Examples of ICT Swing High

Example 1: Resistance and Reversal

Suppose USD/JPY has been in an uptrend, forming a swing high at 145.50.

The next two candles fail to breach 145.50, forming lower highs at 145.25 and 145.00.

A bearish candlestick pattern forms below 145.50, signaling resistance.

A short position can be considered with a stop above 145.50, and take-profit targets can be placed at the nearest swing low.

Example 2: Liquidity Collection

On GBP/USD, price creates a swing high at 1.2200.

Institutions push the price slightly above this swing high to 1.2220, collecting liquidity and triggering stops placed by retail traders above 1.2200.

Price quickly reverses after collecting liquidity, forming a bearish candle below the previous high.

This retracement after the liquidity grab can be an entry signal for a short position, with targets near recent lows.

5. Summary of ICT Swing Highs

Aspect	Description
Definition	A local peak where the middle high is higher than highs on either side.
Purpose	Identifies resistance, stop placement, and potential reversal zones.
Use in Strategy	Enables precise entry points for short positions and targets for profit-taking or stop placement.
Institutional Action	Institutions often push above swing highs to capture liquidity before reversing direction.

Swing highs are pivotal in ICT strategies, providing critical information on where price may resist further upward movement, offering traders a structured approach to manage risk and identify entry and exit points.