[B]Student’s Question:[/B]
I’m confused. What does making “higher highs and higher lows” mean?
[B]Power Course Instructor’s Response:[/B]
Yes…it can be a bit confusing at the outset.
Take a look at the chart below and look at the uptrends shown in green. As a pair trades to the upside, as price action moves up and retraces, moves up and retraces or pullsback, and continues to do so, each high will be higher than the one before it and each low will be higher than the one that occurred just prior. There may some minor exceptions as the move/trend continues, but, overall, that is how it builds.
Lower lows and lower highs would be what a trader would see as a downtrend continues.
Also, on the chart below, there are two examples of the pair trading in a range.
