52-Week Range or Yearly Range
The 52-week range is the difference between the highest price and the lowest price an asset has traded at over the last 52-weeks (approximately one year, so it is also called the yearly range).
What is a 52-Week range?Copy link to section
The 52-week range provides information on how volatile an asset is, as well as where an asset’s current price is relative to the highest and lowest price over the last year.
The wider the 52-week range the greater the volatility, although this must be considered in relative terms. For example, a $5 difference between the yearly high and yearly low doesn’t mean the same for a $10 stock as it does for a $100 stock. The former had price swings of about 50%, while the latter had price moves of about 5%.
An asset’s current price lets traders know whether the asset is strong (trading near its 52-week high) or weak (trading near its 52-week low) relative to the yearly range.
One year is arbitrary and may or may not have significance to all traders. To a day trader, the daily range (average movement each day) is more important. To longer-term traders/investors the high and low prices over several years may be more significant for making trading decisions.
52-Week high or yearly highCopy link to section
The 52-week high is the highest price a transaction has occurred at in an asset over the last 52-weeks (approximately one year, so it is also called the yearly high).
Whether an asset is trading near, or creating a new, 52-week high gives traders insight into how the stock is performing relative to the last year. An asset that is near the 52-week high is showing strength, as the price is near the highest level it has been all year. A price that continually makes new highs is in an uptrend because the price is continually pushing higher. When the price is not near its 52-week high it means it is weaker than it was at some other point in the year.
Some traders view an asset at a yearly high as a good thing and try to buy assets which are trading near those highs. An asset needs to rise to reach a 52-week high, so the thinking is that the asset will continue to rise. If you already purchased an asset, that asset trading near its 52-week high, or creating new highs, is a positive sign.
Other traders view a stock that is trading near a 52-week as too high of a price to pay for it, since it could have been purchased at a lower price over the last year. While these traders view the price as too high to get in if they already bought then seeing the asset move to a new yearly high is a positive sign because they are making money.
Is the yearly high a trading signal?Copy link to section
The 52-week high is not a definitive signal to trade or not to trade; it is simply the highest price over the last year. How traders interpret it is up to them. The one-year time frame is not relevant to all traders. A day trader for example, who places trades that last minutes or even seconds, will gain little insight from knowing the 52-week high. A long-term investor, holding positions for 10 years or more, may also have little interest in the yearly high. They may be more interested in the high price of an asset over the last several years. For traders taking trades that last weeks, months or a couple of years, the 52-week high may be relevant as it provides trading opportunities (if the trader has a strategy for trading near yearly highs) over those time frames.
52-Week low or yearly lowCopy link to section
The 52-week low is the lowest price a transaction has occurred at in an asset over the last 52-weeks (approximately one year, so it is also called the yearly low).
It gives traders an insight into how the asset is performing relative to the last year. An asset that is near the 52-week low is showing weakness, as the price is near the lowest level it has been all year. A price that continually makes new lows is in a downtrend because the price is continually pushing lower. When the price is not near its 52-week low it means it is stronger than it was at some other point in the year.
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