What it means
The latest higher low is the level buyers must defend to keep the trend alive.
In practice
This sequence is the working definition of an uptrend. While it holds, traders favour long trades and look to buy the dips, with the most recent higher low as the line in the sand.
Each new higher low gives a place to move a stop up to, which is how a trend can be followed without guessing where it ends.
What to watch for
The sequence depends on which swings you count, and that depends on the timeframe. Mark the swings on the timeframe you actually trade, and do not count every small wiggle as a new high or low.
Related terms
3 terms- Lower high and lower lowEach rally peaking lower and each drop going further: the definition of a downtrend.
- Break of structureBOSA close beyond the last swing point in the direction of the trend, confirming the trend continues.
- Change of characterThe first close against the trend through its last protected swing, an early sign the trend may be turning.