A friend sent this chart with the message:I am trying to figure out High 1 and High 2. Am I getting them right? My answer may help you. The high 1 you marked is correct if you take the exact definition but not if you take the spirit of the definition. you see never go counter trend until there is some sign of counter trend strength. the bar you marked 1 had some strength but failed miserable and was in fact a failed high 1 or low 1.a low 1 is usually a failed high 1. so counting that bar as a sign of strength is not adviced : got it? and there was no counter trend strength [because there was no trend line break] and if there is no counter trend strength you do not look for a set up to take [ the counter trend] trade. the H2 is not a magic incantation to make the market go up it IS ONLY A SETUP and you only even look for a set up when the context is correct so the set up you took, was actually a H1 not H2,and you do NOT take H1 setup trade after 8 NON BULLISH BARS. you only take H1 setup if the market is shooting up and the bar you marked 1 is actually a low 1 trade, which was a good set up for short but the context [the huge up bar to the left] meant that it was not a swing not surprisingly the market tested the low and your stop as well the bar which tested the low, a reversal bar, also completed the test of the low of the huge up bar and NOW the context was correct to look for an entry setup, so that you may manage the trade and you got the gift of H2