What is Higher Low?

Higher low is a term that refers to a new low price point that is higher than the previous low price point in an upward price trend. This is an indicator that shows that the upward trend in asset prices may continue.

Get to Know with Higher Low

A higher low takes place when the closing price of a cryptocurrency surpasses that of the preceding day. For example, a cryptocurrency might conclude with a 2% decline on one day but still higher than the prior day's close. 

This scenario qualifies as a higher low since the declining day fails to reach the previous day's low. An elevated bottom may imply an ascending trend, offering traders a rationale for engaging in long positions.

Is a Higher Low Bullish?

A higher low may suggest bullishness but doesn't guarantee it. If a higher low is succeeded by a lower peak, the market might be trading laterally or could potentially shift to a bearish trajectory with a fresh lower low. 

Under such circumstances, traders might hedge their positions or await more favorable market signals. Conversely, if a higher low is pursued by a higher peak, it typically signifies a bullish trend.

How to Approach Trading at a Higher Low

Trading at a higher low presents challenges as it can be construed in various ways. In an upward trend, a higher low signals bullishness if it leads to a higher peak. In such instances, traders would initiate long positions. 

Conversely, if it culminates in a lower peak, it could indicate exhaustion, potentially transitioning the market into a distribution phase.

Complex Trading Decision

However, if the price isn't following an upward trend, trading at a higher low becomes complex. In a downtrend, it might indicate the cessation of selling pressure and the commencement of consolidation. 

Alternatively, it could mark the inception of a rally that fails to establish a new pattern. Traders might opt to incorporate additional indicators like RSI and moving averages to glean further insights into market dynamics. 

Moreover, extraneous factors such as macroeconomic developments or token-specific news often wield considerable influence on prices and can nullify chart patterns.

Closing Thought

Traders should grasp the interpretation of all signals and not exclusively rely on technical analysis. While higher lows are relatively straightforward to navigate during an upward trend, they pose significant challenges otherwise. Experienced traders can discern whether an higher low signifies a continuation of the upward trend.

Also Read

What is Financial Risk and its Types?

What is Gains?

What are Market Makers and Market Takers?

What Is Market Cap?

DISCLAIMER: This article is informational in nature and is not an offer or invitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.