In technical analysis and price charts, the Previous Monthly High and Low (PMH & PML) represent the highest and lowest traded prices over the past month.
The Previous Monthly High (PMH) and Previous Monthly Low (PML) are essential data points for market analysts as they indicate price fluctuations over a monthly timeframe. The levels derived from them play a significant role in market trends.
What are the previous Months' high and low?
Each of these concepts has its own significance, which is detailed below, along with an illustrative example:
Previous Monthly High (PMH)
This value represents the highest price that an asset (such as stocks, cryptocurrencies, commodities, etc.) has reached during a full trading month.
On a candlestick chart, the highest shadow (wick) of the highest candlestick in the past month indicates this level.
Previous Monthly Low (PML)
This value indicates the lowest price that an asset has reached during a full trading month.
On a candlestick chart, the lowest shadow (wick) of the lowest candlestick in the past month represents this level.
Why Are the Previous Month’s Highs and Lows Important?
The highest and lowest points of the monthly candlestick have multiple applications in trading strategies like ICT style:
- Identifying Price Volatility: The gap between PMH and PML reflects the price fluctuation range over the month
- Support and Resistance: The previous month’s low may act as a support level, while the previous month’s high could serve as a resistance level.
- Liquidity Zones: In ICT Style and Smart Money strategies, these points are considered Liquidity in Forex, highlighting areas where stop-loss orders tend to cluster
- Market Behavior Analysis: These levels help traders understand price behavior throughout the month and year.
- Trend Identification: A gradual increase in PMH and PML indicates an uptrend, whereas a decline suggests a downtrend.
This trend behavior can determine seasonal or yearly price direction in higher timeframes.
Conclusion
The Previous Monthly High (PMH) and Previous Monthly Low (PML) are the highest and lowest prices a market reaches over a full month.
These levels may be formed based on either candlestick wicks or bodies and often act as support and resistance zones.
