Wondering why the 52-week high/low is essential in stock market trading? Or why do long-term traders give utmost importance to analysing technical charts? If so, then you have come to the right place. In the highly volatile financial market, knowledge is power, and that’s the reason we have crafted this blog to discuss these concepts and how to trade with them.
What are 52-week high/low levels?
Expert traders use these levels to analyse their assets’ current value and future price movement. Their interest generally piques when a particular stock is in the high or low range within the last 52 weeks. It can be due to the market’s volatility or the stock trending in one direction.
These statistics depict the stock’s highest and lowest closing price in the last 52 weeks. As a new week is added, the oldest one is removed. It is based on the daily closing price for the asset.
How does it work?
Depending on the trader’s investment style, an individual can buy a stock when its price exceeds the high. They may even sell it when the price falls below the 52-week low. The thought behind the strategy is that if a price breaks out from its below or above range, then some factor must drive it. This factor has created enough momentum to propel the price movement in the same direction. Before making a buying or selling decision, be sure to consult a 52-week high-low stock app so that you can make the correct move.
What is the importance of a 52-week high/low?
This range is not just a mere statistical marker in the financial market. They help investors make significant investment decisions after conducting a thorough market analysis. Listed below are some of their major functions:
- Identifying the market trend and sentiment
- Assessing the volatility of the market
- Investors used these benchmarks as a decision-making tool
- Strategies for identifying and investing in 52-week high and 52-week low
Identifying high stocks
1. Stock screeners
Some numerous online platforms and websites offer such screeners. These help you to filter assets based on various criteria, including 52-week highs and lows. With the 52-week high-low stock screener, you identify assets that have recently increased their levels.
2. Financial news
You can conduct a thorough market analysis to understand the upward moves of your stocks. By staying updated with financial news, you can reach a starting point for the research.
3. Investing in 52-week high stocks with caution
You can look for additional signs of uptrend, such as increasing trading volume and positive analyst ratings. You can take these steps without solely relying on the 52-week high.
Conducting a thorough fundamental analysis to assess the company’s financials and growth prospects helps you assess if the high stock prices are justified.
Consider entering the financial market at a pool back or correction for a better risk-reward ratio.
4. Identifying 52-week low stocks
Like the 52-week high stocks, you can utilise screeners and financial news sources to make a proper decision.
Investing in 52-week low stocks with caution
If you take the contrary approach, you can buy stocks out of favour. This might offer a turnaround opportunity.
Just because a stock is at its low does not guarantee its future growth. Therefore, it is essential to investigate the reasons for this decline.
Investing in low stocks is a risky business. Thus, you must implement stop-loss orders to limit the potential losses and maintain a diversified portfolio to reduce risk.
Bottom line
The strategies discussed here are just a starting point. It is crucial to make a comprehensive analysis before investing in any stock. To help you in the assessment, Motilal Oswal’s Research 360 will help you with research and recommendations related to the stock market.
With this comprehensive research platform, you can stay updated with live asset prices and gain access to a variety of research tools. So download the app today and start investing for a secure future.
