How do you define a reaction H/L?

G

golablue

One of the few things I debate in my trading on a regular basis is the criteria used to define a reaction H/L. After myriad discussions with many traders, there seems to be a mixed consensus. I am interested in how people here on ET define a reaction H/L.

For the sake of this thread, we will consider an uptrending market.

Do you consider the bar with the lowest low preceding a break of the highest high to be a reaction low?

or

Do two bars with equal lows preceding a break of the highest high constitute a reaction low?

or

Do both of the aforementioned situations constitute a reaction low?

Any thoughts are appreciated.
 
The answer to your 3 questions is "yes". A "significant" low would be defined by a low price that is preceded and followed by a higher low, depending on the time-frame you're using. More precisely, you can make distinctions between intra-day, daily, weekly and monthly lows based upon the length of the market trend and giving appropriate significance to each when then market turns the other way.
 
Quote from Grob109:

price is not the variable to use to make this determination.
More...

Agreed; it's usually the pattern on the chart and the speed of the underlying's fall that determines the possibility of a recovery after the following bar makes higher lows and higher highs.
Among these parameters, volumes, time frame and sentiment play a part as well.
 
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