Utilizing High and Low Daily For Forex Trading
Any PA trader (price action) will definitely pay attention to critical levels of high and low, support and resistance. It could be the daily high and low levels, or the high and low levels of the price swings in accordance with the trend movement in the price chart. These high and low levels are important because they can indicate short-term support and resistance areas so as to increase profitable trading setup opportunities and avoid areas full of pending orders.
The previous day’s high and low levels became critical levels that could be achieved in daily movement and showed traders that the market had its own considerations at that level. This level can also be the market psychological level for the next day and is used in daily pivot calculations.
The use of daily high and low levels as a support and resistance level by traders tailored to the needs. Usually, on the intraday chart, the price moving through the previous high and low levels can make it a support and resistance area and if it is located close to some important psychological areas, then these levels will be more meaningful.
The forex charts certainly contain short term trends even in any timeframe. This formed trend does not last forever and there will certainly be reversal or correction (retrace). Traders can take advantage of this (retracement) movement by using the Fibonacci Retracement tool, which contains Fibonacci levels. This correction motion can be called as swing high and low in trend.
The level that is formed from the Fibonacci ratios in the forex market is actually still a debate. But it becomes influential because most of the global forex market players use these Fibonacci tools to place their trading positions. Because many are wearing so it looks normal if there is a reversal or retrace motion around Fibonacci levels such as 23.6%, 38.2%, 61.8% and other Fibonacci levels.
PA and Technical Traders use this Fibonacci level as a confirmation level for trading setup, especially if supported by a valid support and resistance area.