Higher high and higher low formations are key concepts in technical analysis used to identify and confirm an uptrend in the price of an asset, such as a stock or a currency pair. These formations are typically seen in price charts and can be indicators of bullish market sentiment.
When lower lows and lower highs are breaking, it typically indicates a potential reversal or shift in the prevailing downtrend. Let's break down what this means:
Lower Low (LL): A lower low occurs when the price of an asset falls to a level that is lower than the previous low in a downtrend. It suggests that sellers are willing to accept even lower prices, indicating bearish momentum.
Lower High (LH): A lower high refers to a price point that is lower than the previous high in a downtrend. It demonstrates that, during corrective moves, buyers are unable to push the price significantly higher, indicating ongoing bearish pressure.
When you say that "lower lows and lower highs are breaking," it implies that the asset's price is exhibiting a change in trend direction. This often signifies a potential trend reversal from a downtrend to an uptrend or a period of consolidation.
In a bullish context:
A "break" in the pattern would involve the price forming a higher high (HH) and a higher low (HL), indicating a potential uptrend.
In a consolidation context:
A "break" might mean that the price is moving sideways, neither forming lower lows nor higher highs, and is range-bound for a period.
It's important for traders to closely monitor these patterns and look for confirmation signals such as increased trading volume, strong price breaks above resistance levels, or supportive fundamental factors before making trading decisions. Additionally, risk management strategies should always be employed to protect against potential losses.
In this chart, we see the LL formation is broken and we see a new Higher Low, we can enter with the confirmation when the last LH is broken as well confirming the change of direction from bearish to bullish.
When lower lows and lower highs are breaking, it typically indicates a potential reversal or shift in the prevailing downtrend. Let's break down what this means:
Lower Low (LL): A lower low occurs when the price of an asset falls to a level that is lower than the previous low in a downtrend. It suggests that sellers are willing to accept even lower prices, indicating bearish momentum.
Lower High (LH): A lower high refers to a price point that is lower than the previous high in a downtrend. It demonstrates that, during corrective moves, buyers are unable to push the price significantly higher, indicating ongoing bearish pressure.
When you say that "lower lows and lower highs are breaking," it implies that the asset's price is exhibiting a change in trend direction. This often signifies a potential trend reversal from a downtrend to an uptrend or a period of consolidation.
In a bullish context:
A "break" in the pattern would involve the price forming a higher high (HH) and a higher low (HL), indicating a potential uptrend.
In a consolidation context:
A "break" might mean that the price is moving sideways, neither forming lower lows nor higher highs, and is range-bound for a period.
It's important for traders to closely monitor these patterns and look for confirmation signals such as increased trading volume, strong price breaks above resistance levels, or supportive fundamental factors before making trading decisions. Additionally, risk management strategies should always be employed to protect against potential losses.
In this chart, we see the LL formation is broken and we see a new Higher Low, we can enter with the confirmation when the last LH is broken as well confirming the change of direction from bearish to bullish.