Trend recognition: higher highs and higher lows?

Hi

I have a question regarding studying a stock price chart and trying to find an uptrend by identifying higher highs and lower lows.

For example when you try to find a higher high, do you use the high price for the day, or the close price?

Conversely when finding a lower low, do you use the low price for the day, or the close price?

I know this is easy to see on a chart, but I am working on software where I'm trying to find trends and am not sure which price to use.

Any help would be appreciated.

Thanks

For higher high, high price for lower low, low price...so far this is what i feel..

Most would recommend the intra-day high and the intra-day low as being the reference levels, so your charts really need to be set to bars or candlesticks, not line, which is generally just the closing price.

Some TA does take strong account of the close however - its an important price as everybody in that market had the chance to 'vote' on its correct level, and on the given day its the price that had longest to establish. So don't ignore the close, use OHLC or HLC settings for charts.

What you might pay less attention to is the opening price - at the open, it can be taken to be an estimate, not a price derived by actual trades so it can be a help to what people think but it isn't a picture of what they have done like the others.

calebsandfort said:

Hi

I have a question regarding studying a stock price chart and trying to find an uptrend by identifying higher highs and lower lows.

For example when you try to find a higher high, do you use the high price for the day, or the close price?

Conversely when finding a lower low, do you use the low price for the day, or the close price?

I know this is easy to see on a chart, but I am working on software where I'm trying to find trends and am not sure which price to use.

Any help would be appreciated.

Thanks

Click to expand...

if it helps I backtested a strategy that uses a break of the last high as an entry point. I backtested using the high and the close, there was really no significant statistical difference in terms of the hit rate percentage using either.

a strong trend is a strong trend will take out either the high/low or close.

Make it easy don't trade till you see a strong trend.

you'll be sitting on your hands a lot but it's worth it!