Distance From Highs
What Is the Distance From Highs Indicator?
The Distance From Highs indicator shows how far a security's price is from a recent significant high. Because previous highs often act as natural resistance lines, knowing whether or not price is close to a previous high during an uptrend can help chartists to identify potential changes in trend and set entry/exit points.
Calculating the Distance From Highs
The formula for this indicator is simple:
The High value is subtracted from the Close in order to determine the difference between the two values. The difference is divided by the High value and multiplied by 100 in order to convert the raw value to a percentage.
Cool Tip: Expressing the value as a percentage makes it easier to compare Distance From Highs values over time or even between different securities.
The formula can be calculated using the 52-week, 9-month, 6-month, or 3-month high. In addition, the indicator can be calculated with either the intraday high or the closing high. Choose the type and length of high that best meet your technical analysis needs.
Interpreting the Distance From Highs
Recent highs often act as resistance during an uptrend, so it can be useful to see how far away the current price is from the high. If it is close and moving closer to the high, the stock may be heading for a pullback or a change in trend. Chartists should assess momentum and other technicals to determine whether a pullback or reversal is more likely.
If you're a trader who likes to open a long position when price has broken above a significant high, then knowing how far price is from that high can also be useful for timing your trade entries.
In the chart above, Allstate (ALL) is in an uptrend. Although the trend doesn't look very smooth on the chart, the stock has made new 52-week highs quite frequently during this six-month period, touching the zero line of the Distance From Highs indicator at least seven times. The Distance From Highs value for the latest bar on the chart is -0.79%, meaning it is less than 1% away from reaching another 52-week high.
Cool Tip: Another way to look at this same information is with the Distance To Highs indicator, which measures the percent the price would need to increase to reach a previous high.
The Bottom Line
Plotting the historical Distance From Highs values on the chart allows chartists to see at a glance not only how close or far the current price is from the high, but also whether or not it's moving in the right direction over time. This valuable information can help traders to identify potential pullbacks and reversals, as well as time trade entries and exits.
As with all indicators, traders should use the Distance From Highs indicator in conjunction with other indicators and analysis techniques.
Charting with the Distance From Highs
The Distance From Highs indicator can be added to SharpCharts and ACP Charts.
Using with SharpCharts
Distance From Highs is available on SharpCharts in the “Indicators” section. The indicator can be positioned above, below, or behind the security's price plot. Once the indicator is chosen from the dropdown list, a Distance From Highs indicator is added to the chart with the default settings. The first parameter determines the length of the high: 52W (52 weeks, the default), 9M (9 months), 6M (six months), or 3M (three months). The second parameter indicates whether the closing high or the intraday high is used. To configure the indicator for intraday highs, replace the "CLOSE" with "INTRADAY".
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Learn More: For more details on the parameters used to configure Distance From Highs indicators, please see our SharpCharts Parameter Reference in the Support Center.
Using with StockChartsACP
The Distance From Highs indicator can be added from the Chart Settings panel for your StockChartsACP chart. The indicator can be positioned above, below, or behind the security's price plot.
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By default, the indicator uses the 52-week closing high, but the length and type of high can be adjusted to meet your technical analysis needs.
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