A lower high is when the price of a cryptocurrency closes at a high but lower than the previous day.
A lower high is when the price of a cryptocurrency closes at a high but lower than the previous day. For example, a cryptocurrency may close with a 2% profit on one day but lower than the close of the previous day. This would be considered a lower high since this profitable day couldn’t reach the high of the previous day. A lower high can be indicative of a falling trend and give traders a reason to take short positions.
A lower high can be bearish but is not a definite bearish signal. For instance, much depends on whether a lower high is followed by a lower low or not. If the price sets a lower low, this may be indicative of a bearish trend, and traders would be looking to enter shorts.
On the other hand, if the price sets a higher low, this could indicate sideways action. It is also important to take into account if the low is followed by another lower high or a higher high. Another lower high would be confirmation of a bearish trend, whereas a higher high could signal a trend reversal.
Trading a lower high is not easy. It can be interpreted in different ways, depending on whether the price is in an uptrend, downtrend or a different phase. A lower high in an uptrend could signal exhaustion from the demand side and a possible reversal soon. A lower high in a downtrend could signal more supply to follow and a continuation of the downtrend. Alternatively, the lower high could also indicate the beginning of an accumulation phase.
Traders may want to consider other important factors when trading a lower high, such as the RSI and moving averages to get more information about the market phase. The trading strategy may also be influenced by other non-technical factors. Macroeconomic news and token-specific information often greatly influence the price and can break previous chart patterns. In this case, traders should not only rely on technical analysis but also need to take into account external factors.
Lower highs are generally not traded as often as other patterns because of the difficulty level involved when interpreting them. Experienced traders can identify whether a lower high indicates a decline in the market trend, but beginner traders should stick to simpler patterns.
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