If you cannot understand what higher highs and higher lows are, then you are at a serious disadvantage.
These are common signs from the market structure that you should know.
In this article, I’ll explain what they are and how you can take advantage of them.
After this, you’ll see how powerful they can be.
What Does Higher Highs Mean?
In forex trading, “higher highs” refers to a bullish trend in which the price of a currency pair creates a new high, that is higher than the previous – thus a higher high. This is typically seen as a positive sign, as it indicates that the currency is gaining strength and that demand for it is increasing.
To identify higher highs in a chart, you would look for upward price movements that reach new highs without being preceded by a lower low.
In other words, each new high should be higher than the previous high, and there should not be any downward price movements that break the previous high.
Higher highs can be used as a trading signal, as they suggest that the trend will likely continue in an upward direction.
Traders may look to buy a currency pair if they believe that it is experiencing higher highs, or they may set a stop-loss order at a level below the previous high in order to protect their profits if the trend were to reverse.
What are Higher Lows
In forex trading, “higher lows” refers to a bullish signal in which the price of a currency pair creates a new low, that is higher than the previous – thus a higher low. This is typically seen as a positive sign, as it indicates that the currency is gaining strength and that demand for it is increasing.
To identify higher lows in a chart, you would look for upward price movements that reach new lows without being preceded by a lower low.
In other words, each new low should be higher than the previous low, and there should not be any downward price movements that break the previous low.
Higher lows can be used as a trading signal, as they suggest that the trend will likely continue in an upward direction and traders may look for an opportunity to buy at these levels.
what is higher highs and higher lows?
Higher highs and higher lows refer to specific price movements in forex trading.
A “higher high” occurs when the price of a currency pair reaches a new high that is higher than the previous high, without being preceded by a lower low.
A “higher low” occurs when the price of a currency pair reaches a new low that is higher than the previous low, without being preceded by a lower low.
These price movements can indicate a bullish trend and can be used as a trading signal.
How Higher Highs & Higher Lows Create Bullish Trends
Higher highs and higher lows create bullish trends and are the cookie crumbs of clues in how the market is trading using market structure.
If a higher high is created, then a higher low is created afterwards, these essentially create a staircase of price movements to the upside as you can see in the image below:
It’s important to know this because higher highs can form in a downtrend too, these are called market structure breaks, which means there is a shift in the market balance.
How Do You Find Higher Highs and Higher Lows?
Finding higher highs and higher lows is extremely easy.
Here is a quick breakdown of how to find them:
1. Look at the chart and make sure you have either OHLC or Candlestick Patterns charts turned on (so you can see the highs and lows of the session).
2. Find the most recent high, then look left. Is the price higher than the other? If yes, that is the higher high of the current market structure. Mark it on the chart.
3. Find the most recent low, then look left. Is the price higher than the other? If yes, that is the higher low of the current market structure. Mark it on the chart.
That’s it, it really is that simple and a good habit to take not from.
You can use these areas of the markets to gauge true market interest in the asset. If the higher highs are getting higher and more aggressive, then there are plenty of market participants in the market to go higher.
Tools to Help You Find Higher Highs and Higher Lows
Although finding these market structure areas are easy enough, sometimes an indicator may help to make things easier. Here are a couple of tools from the most popular trading platforms that could help you out.
TradingView Higher High and Higher Lows Indicator
This is a free trading script you can add to your tradingview platform which shows the higher highs and higher lows.
This isn’t a bad resource if you are just learning.
MT4 Higher High and Higher Lows Indicator
There are not that many freely available MT4 indicators that I could see in my search without handing money over.
In all honesty, you don’t need them. You can find the higher highs and lows with your own two eyes just as easily.
FAQs
What are higher highs and higher lows?
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Is higher highs and higher lows bullish?
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Conclusion
In conclusion, higher highs and higher lows are important technical analysis tools that traders and investors can use to identify the strength and direction of a market trend. They can be identified by looking for upward price movements that reach new highs or lows without being preceded by a lower low or high.
It is important for traders to understand and be able to identify higher highs and higher lows in order to make informed trading decisions and potentially profit from bullish market trends.