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Hi all ... Im struggling with understanding why, when referencing Low 1 and Low 2 on consecutive tops, they are at the highest point of a candle. Why isn't that called High 1, High 2 etc...
And when referencing High 1 the diagrams indicate the lowest part of the candle?
Im obviously looking at something backwards here.
ty!
Nic
(for reference)
I had the same confusion initially, just like you. But I figured it out, and I’ll explain why L1 and L2 are labeled at the top (though not always precisely) of each pullback. As explained by AI, in a bull trend (like in your example), if you see a bar falling below the previous bar, you should label L on the previous bar (or on a more accurate bar where you think the pullback actually begins). For instance, in the case of the left L1, the second bear bar falls below the previous bar’s lowest price. However, L1 is not labeled on the previous bar but instead on the bar before it, where the pullback starts.
In summary, when you notice a pullback (whether it's a correction or the price falling below the previous bar), you need to label L at the start of the pullback.
I hope this helps clarify things for you!
Ha! It certainly does! I knew I was missing something so simple.
Thank you for taking the time out to explain this to me. 😀
