Confusion about 52 week high/lows

[syusuf66]

Hi all

I have a question about 52 week high and lows. Up until this point, I was under the impression that a 52 week high (same thought-process for 52 week lows) was formed if a stock or any other instrument had traded (at any point throughout the day) at it's highest price of the last year, regardless of what the price closed at. However, after looking into this I saw the following definition on Investopedia...

The 52-week high/low is based on the daily closing price for stocks and indexes. Often times, a stock may actually breach a 52-week high intra-day but end up closing below the previous 52-week high, thereby going unrecognized. The same applies when a stock makes a new 52-week low during a trading session but fails to close at a new 52-week low, going unrecognized. The cliché "If a tree falls in the woods and no one hears it, did it really fall?" applies. However, in these cases, the failure to make a new closing 52-week high/low can be very significant.

This would mean my previous explanation would be wrong, as prices can only form 52 week highs if they actually close at the highest prices they have for the last 52 weeks?

Is this correct? Or can you interpret 52 week highs/lows in 2 different ways: (1.) the higest/lowest price traded at for the last 52 weeks, and (2.) the highest/lowest price closed at for the last 52 weeks?

Any help would massively appreciated. Thanks

 

[barjon]

Most comment will be based on the closing price but you can interpret it either way in your own and personal definitions of your rules.

 

[tomorton]

Beware of putting too much faith in daily highs and lows in stocks and indices. These have a closed session, unlike forex which trades continuously Monday-Friday, and prices can often gap significantly higher or lower at the next open. Very often the high or low of the day is set by the price achieved in the first seconds or minutes of the day and in volume terms, maybe almost nobody traded there. In fact, if you're looking at a spread-betting company's chart, based on their own quotes for their own clients, maybe literally no client actually traded at that extreme quote that day.

The closing price is much more significant, everybody in the market gets the chance to "vote" on it and they have all day to work on it.

 

[syusuf66]

Thanks both. What you said is in-line with the Investopedia definition too I guess, so I will base my 52-week high/low cues on the closed price going forward. It makes sense that this is a more significant reflection of the price too.

 

[malaguti]

Hi all

I have a question about 52 week high and lows. Up until this point, I was under the impression that a 52 week high (same thought-process for 52 week lows) was formed if a stock or any other instrument had traded (at any point throughout the day) at it's highest price of the last year, regardless of what the price closed at. However, after looking into this I saw the following definition on Investopedia...

The 52-week high/low is based on the daily closing price for stocks and indexes. Often times, a stock may actually breach a 52-week high intra-day but end up closing below the previous 52-week high, thereby going unrecognized. The same applies when a stock makes a new 52-week low during a trading session but fails to close at a new 52-week low, going unrecognized. The cliché "If a tree falls in the woods and no one hears it, did it really fall?" applies. However, in these cases, the failure to make a new closing 52-week high/low can be very significant.

This would mean my previous explanation would be wrong, as prices can only form 52 week highs if they actually close at the highest prices they have for the last 52 weeks?

Is this correct? Or can you interpret 52 week highs/lows in 2 different ways: (1.) the higest/lowest price traded at for the last 52 weeks, and (2.) the highest/lowest price closed at for the last 52 weeks?

Any help would massively appreciated. Thanks

I read the investopedia article slightly differently. for the first part it explains that the 52 week high/low is the highest/lowest price recorded. which is the calculation used for the donchian channel and the aroon indicator.
It only mentions closing prices when using a breakout strategy. In other words you should look to adopt a closing price above/below the highest high/low for that period
that's how I read it and does coincide with my use of that breakout strategy. I look for a daily close, above the highest high from a weekly chart.

 

[syusuf66]

I see. I guess that's another way you could look at it too...

So your saying you interpret 52 week highs as prices that have not only closed higher than any other daily closing prices for the last year, but have also closed higher than any intra-day price for the last year whilst doing so?

 

[malaguti]

I see. I guess that's another way you could look at it too...

So your saying you interpret 52 week highs as prices that have not only closed higher than any other daily closing prices for the last year, but have also closed higher than any intra-day price for the last year whilst doing so?

no, i interpret the 52 week high as just that, the highest high for the last 52 weeks which is how it should be determined, not the highest close for the last 52 weeks

the entry signal, and this is where I interpret investopedia, would be the first daily close higher than the 52 week high
so if the 52 week high price is 100, I wouldn't enter at an intraday price of 101, I would wait for the daily closing price to be higher than 100