Highs and Lows Move Together: A Key Insight for Retail Traders

• Daily Highs: The highest price an asset reaches during a trading day.
  
• Daily Lows: The lowest price an asset hits during the same period.
  
• Price Range: The difference between the daily high and low, which gives a measure of the day's volatility.
  

⚪ Highs and Lows as Important Levels:
The daily high is the highest price that an assets reaches in a day, and the daily low is the lowest price. These points are important because they often act like barriers in the market. If the price approaches the daily high, it might struggle to go higher, like hitting a ceiling. If it can’t break through, it might start to fall back down. Similarly, when the price gets close to the daily low, it might find support, like hitting a floor, and start rising again.

⚪ Market Reactions:
When the price reaches these highs or lows, it often reacts strongly. For instance, if the price hits a high but then drops, it suggests that traders think the price shouldn’t go higher, leading to a possible reversal. On the other hand, if the price keeps pushing against a high and finally breaks through, it could signal the start of a new upward trend.

In simple terms, the highs and lows act like important checkpoints in the market. Watching how prices behave around these levels can give traders clues about what might happen next.

⚪ Daily Highs and Lows Move Together:
The study found that the highest and lowest prices of oil each day are connected and tend to move together over time. This connection means that if one changes, the other usually does too. For retail traders, this suggests that tracking these levels can provide important clues about where the market might be heading next.

⚪ Price Ranges Indicate Volatility:
The difference between the daily high and low (known as the price range) is a strong indicator of how volatile the market is. A large range means the market is very active and prices are swinging widely. For traders, this could mean more opportunities to profit, but also more risk. Conversely, a small range indicates a calmer market with less movement.

⚪ Better Forecasting Models:
The study shows that by understanding the relationship between daily highs, lows, and the price range, traders can use more accurate models to predict future prices. These models outperform simpler methods that many traders might be using. For retail traders, this means there are better tools available that can help them make more informed decisions and potentially increase their chances of success.

⚪ Connection Between Highs and Lows:
If the daily high price increases, the daily low price often increases too, and vice versa. This doesn’t mean they are the same price, but rather that they tend to trend in the same direction. For instance, if the market is generally moving up (bullish), both the daily high and low prices will usually increase from one day to the next.

⚪ Why They Move Together:
This movement happens because the factors driving the price up or down (like supply and demand, market sentiment, or external news) impact both the high and low of the day. If there’s strong buying pressure, it will push the daily high up and also raise the floor, or daily low, as sellers adjust their expectations.