Quote:
Originally Posted by sixdegree
I've tried to look for the meaning of "lower high" and " Higher low" I couldn't find it anywhere. can someone explain for this newbie please? if you have a picture it will be great
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The example below clearly shows price action trending to the upside. It’s displaying stair step type behavior, where the previous high steps are continually being scaled & the previous low ledges are maintaining their uniformity?
It highlights the fact that buyers are in command of this price chart & every time price action descends from it’s high point (HH), it attracts continued support or participation from buyers, thus maintaining the directional flow of money into the instrument.
The 1st signs that this trend or buying bias is beginning to slow down comes when prices fail to extend the ‘stair step’ behavior, highlighted by the shaded area’s.
Buyers are now either taking a little profit off the table & consolidating their positions, or active sellers are stepping in to halt the upside momentum.
This type of behavior will result in prices moving into range type mode, where the highs & lows begin to contradict & form irregular patterns, as in the example below.
Note how the price action now exhibits a choppy, non-trending type behavior? Prices are neither moving in a clear upside or downside bias. Buyers & sellers are more or less cancelling themselves out & are in agreement that this area represents fair value for the time being.
The first signs that buyers are overcoming sellers or vice versa, will be when the price action once more begins to display the type of behavior seen in the 1st example above.
