Technical analysis

Highest High and Lowest Low: How to Use Them

Astron Team · 09/24/2026 · 4 min read

Among the simplest indicators to understand, and precisely because of that widely used, are the highest high and the lowest low over a given number of periods. Despite their simplicity, they're the foundation of breakout systems used for decades by traders in different markets.

In this article, you'll understand how these two indicators are calculated, why they're usually used together, and how to apply them in practice to identify possible price breakouts.

What highest high and lowest low are

The highest high of a period is, literally, the highest price reached over the last N candles. If you set the indicator to 20 periods, it will show, on every new candle, what the highest high was among the last 20. The lowest low works the same way, just looking at the lowest price over the same interval.

Unlike a moving average, which smooths the price, these two indicators mark real extreme boundaries the market has already tested during that period. Because of that, they usually show up on the chart as two horizontal (or slightly angled) lines that rise when new highs are made and fall when new lows appear.

How the calculation works in practice

Suppose that, over the last 20 daily candles of an asset, the highest high was R$ 34.80 and the lowest low was R$ 29.50. As long as the price stays within that range, both lines remain at the same level. The moment the price closes a candle above R$ 34.80, the high line rises to reflect that new ceiling; if the price closes below R$ 29.50, the low line drops to the new floor.

This feature is what makes these indicators useful for identifying breakouts: any close beyond the range of the last N periods represents, by definition, a price the market hadn't reached in quite a while.

Using the two indicators together: the breakout channel

When plotted together, the high and low lines form a kind of channel around the price, similar to the well-known Donchian Channel. This channel visually delimits the recent trading range and makes it easier to see when the price is "stuck" sideways, between the two lines, or when it's in the process of breaking out.

A classic breakout system uses exactly this logic: buy when the price closes above the N-period highest high, and sell (or exit the long position) when the price closes below the same period's lowest low. This type of system became known for having been used by groups of traders who followed mechanical breakout rules across different markets in the 1980s and 1990s.

Precautions when trading high and low breakouts

The biggest risk of this type of signal is the so-called "false breakout": the price closes beyond the range, attracts buyers or sellers, but then returns inside the channel, leaving whoever entered on the breakout with a quick loss. Because of that, many traders require an additional confirmation, such as above-average volume on the breakout candle, before considering the signal valid.

The chosen period (N) also changes the indicator's behavior quite a bit. Short periods, like 10, generate breakouts more often, but also more false signals. Long periods, like 55, generate rarer signals, but historically more consistent ones, at the cost of reacting more slowly to recent changes in the asset's behavior.

Applying it to your analysis

Before using high and low breakouts as an entry trigger, it's worth watching how the chosen asset has historically behaved with this type of signal, testing different periods on Astron to understand the frequency and quality of breakouts on that specific asset. Defining the stop size in advance, based on the distance to the channel's opposite line, helps keep the trade's risk under control, since no breakout system is right every time, and the possibility of loss is part of any trade in the market.

It's also worth comparing the behavior of the high and low across different timeframes of the same asset. A breakout on the daily chart tends to carry more weight than the same breakout on a chart of a few minutes, simply because it reflects a trading range tested over a longer time and by more market participants. Combining this longer-term reading with a shorter timeframe to fine-tune the exact entry point usually reduces the chance of trading breakouts with no real support behind them.