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Today I’ll explain why identifying higher lows in a continuation pattern is so important for me to find entry points. This plays along with the concepts of linearity, stage analysis (Wyckoff Cycle I explained in other posts), and tight ranges. You can find my free program (work in progress) here: https://docs.google.com/spreadsheets/d/1RuQ5vFX4To8xlPLjHV5IkX5qOx06cNF1HlNL2WYscSc and here: https://docs.google.com/document/d/1hFWzfQVNXBkUV2KJ7B9E0Ecah3gAVBWLCyHfAVSl3wI —————– I see higher lows as a footprint the market leaves whenever there’s increased buying pressure. If you spend some time looking at rallies, you’ll see that in most cases there are a series of higher lows before the ‘explosion’ moment. If the stock is linear (I explained this concept here), it will find support in the rising MA10, 20 or 50. If I see the price is putting higher lows following the MA10, 20 or 50, that’s a good sign. Sometimes the higher lows are just plain literal lows of the last few candles, and sometimes it’s what I call ‘visual’ lows, where the closes or opens (the bodies) of the candles ‘draw’ the higher lows. This needs a trained eye, and with enough practice, it’s easy to spot them. Another example: Another example: Another example: It’s important to use the higher lows ‘footprint’ in context. And again, this is something that takes a lot of training to be able to understand when the higher lows make a good sign that a potential momentum explosion could be coming. The support in the MAs is a very good sign. Also the price stabilization (several candles putting a tight range, especially within a bigger range that’s tightening). And what gives me a very good clue are small candles (in range or in body). This means the price keeps reducing the range it’s moving in, and the buying and selling pressure are reaching an area of equilibrium. Then once the price moves outside this very tight range, and the balance breaks, there’s an increased possibility that the buying pressure continues moving the price up. Now go back to the charts I posted above and observe the progression of a:
The higher lows usually also happen earlier and along the setup. This tells me that the buying pressure keeps building up for a longer period of time. This is a very good sign, because, in general terms, the bigger the setup, the longer the potential move up that could follow after the breakout to the upside. The more evidence of increased buying pressure, the better. I’ll explain in some other lesson the importance of the MAs ‘reclaim’ and candles like hammers holding these MAs. Here’s a example: Another example below, where I drew a line to show how the range becomes tighter and tighter along the way, until it reaches a breakout day. This puts several concepts I’ve been explaining in context. ————- That’s all for today! You can find my free program (work in progress – I write whenever I have the time and energy) here: https://docs.google.com/spreadsheets/d/1RuQ5vFX4To8xlPLjHV5IkX5qOx06cNF1HlNL2WYscSc and here: https://docs.google.com/document/d/1hFWzfQVNXBkUV2KJ7B9E0Ecah3gAVBWLCyHfAVSl3wI Sometimes I post setups and trades on X: https://x.com/manucapital submitted by /u/manucap_trader to r/swingtrading |