Learning#05 : Decoding Highs and Lows

📚 Learning#05 : Decoding Highs and Lows

- A Trader’s Guide to Reading the Market - Simple Yet Important

If the market were a book, the trend would be its storyline — and as traders, our job is to read that story without skipping pages. Trading with the trend puts the odds in your favor because you’re flowing with the market’s natural momentum, not fighting it.

Whether it’s an uptrend, downtrend, or a sideways grind, spotting it early gives you a big edge in deciding when to enter, when to exit, and when to simply step aside.

One of the simplest yet most reliable ways to read that story?

👉 Story of Highs and Lows

Let’s break it down.

📚 Understanding Highs and Lows in Trading

In technical analysis, highs and lows are the market’s way of leaving breadcrumbs.

• A high is a peak before the market pulls back.
  
  
• A low is a trough before the market bounces.
  
  

Track these points over time and you start to see patterns that reveal the market’s mood — bullish, bearish, or indecisive.

This isn’t about guessing; it’s about observing price action as it is.

📌 The Four Key Building Blocks of Market Structure


1️⃣ Higher Highs (HH)

Each new high is higher than the one before.Paired with higher lows, this signals an uptrend. Buyers are in control, and demand is pushing price upward.

Example: Nifty rallies from 22,000 to 22,200, pulls back to 22,100, and then rallies to 22,350. That second high (22,350) is higher than the first, confirming bullish momentum.

2️⃣ Higher Lows (HL)

Each pullback low is higher than the last.This tells you that sellers tried to push the market down — but buyers stepped in sooner this time, showing strength.

HLs often precede trend continuation and give great spots for entering long positions with tight risk.

3️⃣ Lower Lows (LL)

Each new low is lower than the previous one.Paired with lower highs, this marks a downtrend. Selling pressure is in charge, and rallies are being sold into.

4️⃣ Lower Highs (LH)

Each bounce high is lower than the last.This shows weakening buying pressure and often leads to another push lower.

Think of it like climbing stairs vs. walking down a hill:

📌 HH + HL = Stairs up → Bull trend.

📌 LL + LH = Hill down → Bear trend.

📈 HH+HL : Bullish Setup :



📉 LL+LH : Bearish Setup :



📌 Why It Matters for Traders

Price action is the most honest information in the market — no lag, no magic, no guesswork.

• HH/HL → Bulls in control → Look for long setups.
  
  
• LL/LH → Bears in control → Look for short setups.
  
  

Spotting these patterns on the fly means you can align with the dominant side instead of fighting it.

🧩 Combining HH & LL With Other Tools

📏 Fibonacci Retracements

Once you’ve identified the trend:

In an uptrend, draw Fibonacci from the latest HL to HH for pullback buying zones.

In a downtrend, draw from the latest LH to LL to find shorting opportunities.

⛰️ Fractals for Clarity

Fractals help pinpoint swing highs and lows without guesswork. I personally track HH/HL/LL/LH on a 1-minute chart for intraday trading — this keeps me in sync with the micro-trend while avoiding sideways traps.

🔀 Trendlines & VWAP

Trendlines show the bigger path, VWAP confirms intraday balance. When HH or LL aligns with these, you’ve got high-confluence setups.

🥷 Kiran’s Approach

For intraday, I start by mapping the structure: HH, HL, LL, LH. This gives me the immediate trend bias and alerts me to potential reversals early. I track them on a 1-min chart, combine with Fibonacci and trendlines, and trail stops as the structure unfolds.

It’s simple, visual, and keeps me out of bad trades and warns me to stay out of a sideways market situation, too.

🔑 Key Takeaway

Market structure is like a language — HH, HL, LL, and LH are its alphabet. Once you learn to read it, you’ll never trade blind again.

💡 “Trade what you see, not what you think. The chart always whispers first — you just have to listen.”

Start marking highs and lows on your chart tomorrow. Watch the story unfold. Trade in sync, and you’ll notice your entries become sharper, your exits cleaner, and your confidence higher.

See you in the next one — and until then:

Keep it simple. Trade with structure. Trust the levels.

— Kiran Zatakia