Forex Daily High Low Strategy

The Forex Daily High Low Strategy identifies the previous day’s highs and lows and enters trades accordingly. In this guide, we’ll mention the strategy and how you can trade it.

What is the Forex Daily High Low Strategy?

The Forex Daily High Low Strategy is a trading strategy that focuses on the previous day’s high and low price levels of a forex pair to identify potential trading opportunities.

The strategy is based on the idea that these price levels can act as support and resistance levels and that price tends to go toward these levels.

The strategy involves monitoring a forex pair’s high and low price levels during the previous trading day and then entering a trade based on the direction of the price movement.

Forex Daily High Low Strategy
Forex Daily High Low Strategy

Forex Daily High Low Strategy

When applying the strategy, you have to follow certain steps.

First, you must identify the previous day’s high and low price levels. You can do this by looking at a daily chart.

Next, you should determine the current price level of the currency pair by looking at a current candlestick. You may consider entering a long trade if the current price exceeds the previous day’s. Conversely, you can go short if the current price is below the previous day’s low.

You can add indicators like the RSI or MACD with the strategy for further signal confirmation.

The strategy works well on all timeframes. When applying for shorter timeframes, you have to look for daily high/low and then scale down to a lower timeframe to enter the trade.

A key point to add here is you have to hold the trade until the close of the daily candle. It doesn’t matter which timeframe you are trading; you have to exit the trade at the close of the daily candle.

Buy Signal

  • The current price should be above the previous day’s high.
  • Wait for the price to go upwards and then enter the trade.
  • Place a stop-loss at the previous day’s low.
  • Set take-profit at the recent high or exit the trade when the daily candle closes.
Forex Daily High Low Strategy buy signals
Forex Daily High Low Strategy buy signals

Sell Signal

  • The current price should be above the previous day’s high.
  • Wait for the price to go upwards and then enter the trade.
  • Place a stop-loss at the previous day’s low.
  • Set take-profit at the recent high or exit the trade when the daily candle closes.
Forex Daily High Low Strategy sell signals
Forex Daily High Low Strategy sell signals

Forex Daily High Low Strategy Pros & Cons

Here are the pros and cons of the strategy:

Pros

  • The strategy is easy to understand.
  • It doesn’t require detailed analysis.
  • It can be applied on any timeframe.

Cons

  • The strategy may not work in high volatility.
  • It may not perform well in choppy markets.

Conclusion

The Forex Daily High Low Strategy focuses on the previous day’s high and low price levels to identify potential trading opportunities.

The strategy is simple and can be applied to any currency pair and in any time frame. However, it may not work in volatile and ranging markets.

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