What Is a Higher High?

A higher high is when the price of a cryptocurrency closes higher than the previous day, which itself closed at a high. For example, a cryptocurrency may close with a 2% profit on one day and a 3% profit on the next day. This would be considered a higher high since one profitable day is followed by another profitable day. A higher high can be indicative of a rising trend and give traders a reason to enter buying positions. 

Is a Higher High Bullish?

A higher high can be bullish but is not a definite bullish signal. For instance, a bearish divergence is when the price makes a higher high while the technical indicator (RSI) makes a lower high. This shows a bullish move on the market but indicates that the momentum is slowing down, and a decline in the price may soon follow. 

If, on the other hand, a higher high in prices is accompanied by higher highs on technical indicators, this can be considered a bullish sign.

How Do You Trade a Higher High?

Depending on the trend, there are multiple ways to trade a higher high. For example, if the price is in an uptrend, and the first high is followed by a higher high, it depends on the next price move. A lower low would indicate a sell and a lower high would indicate a buy. Traders would sell when the price reaches the previous first high after setting a lower low. If the price prints a higher low, traders would buy the higher low to ride the uptrend further.

In a downtrend, the price may print a higher high after a lower low. In this case, traders would wait for the price to hit a higher low to enter a long position. In this case, a tight stop-loss order is imperative so traders don't fall victim to a new lower low. The stop-loss would be set at the previous lower low, with take-profit orders at the previous high and the higher high.

Also Read: How to Use Stop Loss and Take Profit in Trading?

Other trading strategies involving higher highs can be more advanced. For example, traders may want to take into account the RSI and moving averages to get a more sophisticated picture of take-profit and stop-loss targets. The trading strategy may also be influenced by other non-technical factors. For example, macroeconomic news or token-specific information can lead to a breakout in the market structure and set up a completely new chart pattern.