Previous Day High & Low
By the end, you can explain why the previous day's high and low are watched, and what a reaction there tells you.
Yesterday's battlefield. The high and low are the furthest each army pushed before it ran out of steam. Everyone remembers those lines — so they matter again today.
The previous day high (PDH) and previous day low (PDL) are where buyers and sellers previously changed behaviour — the edges of yesterday's auction. Traders remember them, so they become reference points today.
A reaction at PDH/PDL is information: a rejection at PDH says sellers still defend it; acceptance above PDH says buyers are willing to pay more than yesterday's best. Same logic mirrored at PDL.
“Yesterday's high is old news — ignore it.”
“We're approaching yesterday's high, where sellers last took control. I'll watch whether it's accepted or rejected before assuming anything.”
On today's chart, draw yesterday's high and low. Note whether price has reacted at either today — and how.
What do the previous day's high and low represent?
- PDH/PDL are the edges of yesterday's auction.
- They matter because traders remember and react to them.
- Read acceptance vs rejection there, don't assume a bounce.
Up next — Futures trade overnight too — those extremes matter before the day even opens. Next: overnight high and low.