Equal Highs (EQHs) Explained
An Equal High (EQH) is a trading concept used by price action traders (also known as SMC or ICT traders). An EQH is a bearish indication used to confirm a trend reversal or area of consolidation in the market.
How to Identify an Equal High (EQH)
An Equal High is found by identifying a swing high, which price later retests and rejects. The swing high must be higher than the candle that retests the level.
Trading Using an Equal High (EQH)
Equal Highs are not used as entry and exit points; instead, they are used as confirmation that the current market trend will reverse. This means that when an EQH is formed on a chart, traders can adapt a bearish bias and look for only short entries.
Common Strategy Using Equal Highs (EQHs)
Equal Highs (EQHs) are used in strategies with other price action formations. A common strategy is using an Equal High (EQH) with order blocks. An Equal High indicates a shift in the market trend, from bullish to bearish, which allows traders to look for short entries. A retest of a bearish Fair Value Gap (FVG) can be used as an entry point after having a trend bias confirmation. A trader will exit their position when key levels of interest are reached such as a bullish order block, level of support, or buy side liquidity.
What is the best timeframe for using Equal Highs?
The ideal timeframe for using Equal Highs depends on the trader's style; day traders might prefer shorter timeframes like 1 to 15 minutes, while swing traders may find hourly or daily charts more beneficial. Longer time frames tend to offer more reliable signals by reducing market noise.
What is a common mistake when trading Equal Highs (EQHs)?
A common mistake traders fall victim to with Equal Highs, is not using other forms of confluence to enter their trade. Traders should build strategies around systems with certain conditions to increase their winning probabilities; entering short in the market based on one bearish indication can lead to losses.
How accurate are Equal Highs (EQHs) when predicting future price movements?
Equal Highs are reliable indications of resistance and market reversals, but are best when used with other forms of confluence such as bearish Fair Value Gaps, bearish Order Blocks, Supply Zones, etc.