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Home / Education / Technical Analysis Learning Center / Highest High / Lowest Low

Highest High / Lowest Low

The mathematics defines an envelope of values by using the Highest High or the Lowest Low of the Last ‘n’ Periods.

Download our free guide, Futures Trading: Technical Analysis for Beginners,  today!

Properties

Period1: The number of bars in a chart. If the chart displays daily data, then period denotes days; in weekly charts, the period will stand for weeks, and so on. If the default length of the study is chosen (the software uses a period of 10), the study will return the highest of the high price values over the previous 10 bars.

Period2: The number of bars in a chart. If the chart displays daily data, then period denotes days; in weekly charts, the period will stand for weeks, and so on. If the default length of the study is chosen (the software uses a period of 10), the study will return the lowest of the low price values over the previous 10 bars.

Interpretation

The rules generally followed for this study are:

  • Enter the market when one of the bands is penetrated. This indicates a possible start of a trend.
  • Exit and reverse the position when the opposite band is penetrated.

Another rule you may want to apply is the Donchion’s rule:

  • Cover short positions and go long whenever the price exceeds the high of the previous four weeks.
  • Reverse long positions and go short whenever the price exceeds the low of the previous four weeks.

Content Source: FutureSource

Read our guide, Futures Trading: Technical Analysis for Beginners

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THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

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