In Forex trading, the term “low low” refers to a situation where the price of a currency is below its previous lowest point. The low low signal usually indicates that buyers are starting to enter the market, and that prices will likely move higher soon.
The opposite situation – high low – occurs when the price of a currency is above its previous lowest point. In this case, sellers may start withdrawing their investments from the market, and prices could drop soon thereafter.
In the foreign exchange (forex) market, there are generally two trends that traders observe: a low and lower high. These patterns indicate when buyers and sellers are feeling confident about the future prospects for the currency in question.
When observing these trends, it’s important to keep in mind the following points:
- The low usually marks the beginning of a trend, while the lower high indicates its completion.
- It can be helpful to buy stocks or commodities during a low if you believe that it’s an indication of an upward trend ahead. Conversely, selling stocks or commodities during a low may help you profit from potential downward movement.
- The length of each cycle is different depending on the currency involved; however, they tend to last around six weeks on average.