Hindsight is easy
Once you know a match result, the decisive moment looks obvious. Historical charts create the same temptation. You can see a peak and forget that it was not yet a confirmed peak at the time. Our goal today is not prediction. We want a rule another reviewer can reproduce. The distinction between event time and recognition time is the key to this lesson.
Choose an explicit convention
For this exercise, a swing high has a high greater than the highs of two candles before it and two candles after it. Reverse the rule for a swing low. Equal values remain unclassified. This is not the only possible definition of structure; it is a reproducible teaching convention. Choose it before reviewing the result rather than after finding a favorite example.
Example one: delayed recognition
Look at five hypothetical highs: ten, twelve, fifteen, eleven and thirteen. Fifteen exceeds the two values on each side, so the middle candle is a swing high. When do we know that? After the fifth candle closes, not at candle three. A test that enters at candle three using that confirmation has borrowed future information. Record the pivot time and confirmation time separately.
Example two: trend or unresolved?
Confirmed highs of one hundred, one hundred and five, and one hundred and nine rise together with lows of ninety-five, ninety-eight and one hundred and two. Under our rule, both sequences are rising. Now suppose the next high falls while the next low rises. Do not force an immediate bullish or bearish label. Mixed structure is a useful answer when the evidence is mixed.
Define a break beforehand
A wick touch, one close beyond a level and several closes beyond it are three different definitions of a break. Pick one for the exercise and apply it consistently. A visible high may suggest a hypothesis about nearby orders, but candles cannot reveal a bank’s intentions or everybody’s stop location. Record observations and keep liquidity explanations conditional rather than certain.
A reproducible assignment
Label ten highs or lows using the two-candle rule. Write two timestamps beside each: the pivot’s timestamp and its confirmation time. Then classify sections as trend, range or unresolved. A valid answer must be reproducible from the rule; predicting the future is not required. In our five-value example, the pivot is candle three and recognition follows candle five. Next we add time and market conditions.
