Friday, March 29, 2024

Lower High

by Hideo Nakamura
Lower High

Lower High Definition

A lower high, also known as a bearish reversal pattern, is a technical analysis indicator that signals a decrease in the price of an asset. It occurs when the highest high in a given period is lower than the previous period’s highest high (or higher low). This indicates that there is now less buying pressure and more selling pressure, which could mean that further downward movement may occur. The opposite of this would be a higher high or bullish reversal pattern.

When To Watch For Lower Highs?
In order to properly identify lower highs, they must appear after an extended uptrend/bull market. If you are looking for lower highs during bear markets it will be much harder to identify them due to their rarity and because other indicators like increased volatility can often accompany the formation of these patterns. When prices have been trending up for some time, then form two successively lower peaks on your charting software –this marks a “lower high” and should alert you to potential weakness in the security’s trend direction.

How To Trade Lower Highs?
Once identified, traders should wait for confirmation before entering any positions as this signal alone does not guarantee future movements nor can one trade solely based on it without taking into account other factors such as trend strength or momentum etc.. Generally speaking however if you see significant volume with each successive peak then chances are good that prices will continue falling until support levels are found at which point buyers might again enter the market causing prices to reverse course once more. Traders can use stop-loss orders below recent lows in order to guard against excessive losses when trading off of this indicator while keeping rewards relatively limited by setting limit orders near minor resistance levels ahead of major ones (where profits become capped).

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