LHB Strategy
LHB (LOW HIGH BREAK) Strategy is my personal trading strategy that can be very helpful for swing traders. I personally believe that this strategy has very good accuracy. But we need to consider some other factors to use and predict the market movement for upcoming sessions.
First I would like to talk about factor that we need to consider while applying this strategy.
A- Candle Type: To predict tomorrow’s movement, We need to know which type of candle is forming today. If you don’t know the type of candles then I would suggest you to have good knowledge about the candles. Please read this article to know the type of candles.
B- Trend : You need to predict the market trend. Market can be 3 types. Bullish, Bearish and sideways. If you want to know how to predict the trend please read this article.
C- News: You should check the news also because news plays very important role on market’s movement. If the news is bad then it’s quite possible that technical analysis may not work. One bad news may eat your long term capital gain in few sessions.
Low Break :
If today’s candle break the yesterday candle’s low in the down trend and today’s candle is also bearish candle then it is quite possible to predict the tomorrow movement. It would follow the trend and market would be bearish. you may see the gap down opening or closing in red.
First point in the image above, assume big red candle is the today’s candle and yesterday’s candle is a green doji candle. Doji candle is well known for the trend reversal. We can see that today’s red candle breaks the previous day’s low and high. But the candle is formed as bearish engulfing candle. So the next day will have chances to form a red candle again. Same is in the second and third point. Candle breaks the low and form a bearish candle and market is going down.
High Break:
If today’s candle break the yesterday candle’s high in the up/down trend and today’s candle is also bullish candle then it is quite possible to predict the tomorrow movement. It would follow the trend and market would be bullish. You may see the gap up opening or closing in green.
First point in the chart candle breaks the low and high but formed a bullish candle and then market reverse its trend and the next day we saw a big bullish candle and gone for long run. In second point, market halt at this level for some sessions but we can see as candle start breaking its high and formed a bullish hammer candle, again market follows the uptrend.
In the third point we need to predict the next candle based on our strategy. First we will check the Low High Break. Todays candle breaks the high of previous candle but did not break the low. Means there is chances of green candle tomorrow. Second Candle Type, Candle is formed as bearish and so we can assume tomorrow’s candle could be red also. Third is Trend, market is in down trend. so here we have two point which confirm bearish candle tomorrow. But one point is giving sign of green candle tomorrow. And market is at its support level also. So i think market should halt at this level to reverse trend. If it breaks this support level then market will come down.