What exactly happens at a Higher Low?

Discussion in 'Technical Analysis' started by Onra, Dec 30, 2021.

  1. Onra

    Onra

    Maybe point B (after the facts) gives a clue about some form of structure price will react to...
     
    #11     Dec 30, 2021
  2. piezoe

    piezoe

    I am not disagreeing but I want to point out that as the time period gets shorter then what happens at any time point may approach 50:50, but as the time period between points gets longer my experience is that there is a definite bias for the market to do at the next point what it did at the last point, i.e., go up, down, or sideways.

    Traders like to say at every point it's 50:50, but a little consideration of this statement would suggest that averaged over time the market would then move sideways, neither up nor down. Due to inflation alone, markets will over long time periods trend up. Markets over longer periods are not random but show pronounced tendencies to move sideways, up, or down. If what I write is correct, it tells us that traders basing their trades on price alone may do better using longer time frame bars. There are other things in addition to price, of course, that traders may base their trades on.
     
    Last edited: Dec 30, 2021
    #12     Dec 30, 2021
    Onra likes this.
  3. tomorton

    tomorton

    Buyers are buying.
     
    #13     Dec 30, 2021
    murray t turtle likes this.
  4. Onra

    Onra

    And they are buying from (willing) sellers...
     
    #14     Dec 30, 2021
  5. deaddog

    deaddog

    Buyers are having to raise their bid to find a seller.
     
    #15     Dec 30, 2021
  6. tomorton

    tomorton

    Yes. They are happy to buy, and happy to pay a higher price than the buyers did on the upleg from point A. This can only be because they expect price to probably rise from Point B.

    There are many reasons for individual sellers to be selling so its hard to be absolutely certain concerning their motivations, but they clearly don't believe this is the best place for their capital to be tied up right now.
     
    #16     Dec 30, 2021
    Onra likes this.
  7. panzerman

    panzerman

    No exactly, even random walks can produce patterns that look like trends.
     
    #17     Dec 30, 2021
  8. piezoe

    piezoe

    However there is nothing at all about the long term pattern of the market that looks anything like a random walk. Random walks though they contain a few steps in the same direction are still, over all, random. The market is not a random walk, even though what's his name took "a random walk down wall street." (That would have had to have been a random walk with constraints, otherwise he'd have found himself on Nassau, or some intersecting Street! :D). The word "random" which has very specific meaning in the contexts of statistics, just means seemingly haphazard in our every day traders' parlance.
     
    #18     Dec 30, 2021
    tomorton likes this.
  9. Think of it this way. Prices trend because either of more demand or more supply.

    For e.g if prices are going up. More people are buying up the ask prices and sellers aren't taking the bids but are constantly revising their prices higher and higher. Thus buyers has to keep chasing and it pushes the prices up.

    Likewise same for prices going down. Sellers are just unloading at the bids and no one is taking the asks.

    So what happens at point B is that after the selling trend stops it starts the buying trend.

    As to why this happens it is a variety of reasons. Buyers could see A as a pivot point and see it as an area of value and sellers likewise see it as not a good price to sell. Thus, the buyers take over and the sellers keep revising higher asks.

    It could also be because of news, earnings, market sentiment, smart money buying rather than just pivot point support or a mixture of everything etc...
     
    #19     Dec 31, 2021
    Onra likes this.
  10. SunTrader

    SunTrader

    The peak in between point A and point B is where you should be looking.
     
    #20     Dec 31, 2021
    Onra likes this.