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In stock trading, the terms “higher low” and “lower high” are related to technical analysis and the study of price patterns on a stock chart.
- Higher Low:
- A higher low occurs when the lowest point (or trough) of a price chart is higher than the previous lowest point.
- It suggests that buyers are willing to enter the market at higher prices, indicating potential strength or bullish sentiment.
- Higher lows are often seen as a positive sign and can be part of an uptrend.
- Lower High:
- A lower high occurs when the highest point (or peak) of a price chart is lower than the previous highest point.
- It indicates that sellers are entering the market at lower prices, signaling potential weakness or bearish sentiment.
- Lower highs are often associated with a downtrend.
Understanding the concepts of higher lows and lower highs can help traders identify trends and trend reversals. An uptrend typically consists of a series of higher highs and higher lows, while a downtrend is characterized by lower highs and lower lows. Recognizing these patterns can assist traders in making informed decisions about when to enter or exit positions. Technical analysts often use these patterns in conjunction with other indicators to make predictions about future price movements.
