Distance To Lows
What Is the Distance To Lows Indicator?
The Distance To Lows indicator shows how much a security's price needs to decrease in order to reach a recent significant low. Because previous lows often act as natural support lines, knowing whether or not price is close to a previous low during a downtrend can help chartists to identify potential changes in trend and set entry/exit points.
Calculating the Distance To Lows
The formula for this indicator is simple:
The Close value is subtracted from the Low in order to determine the difference between the two values. The difference is divided by the Close 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 To Lows values over time or even between different securities.
The formula can be calculated using the 52-week, 9-month, 6-month, or 3-month low. In addition, the indicator can be calculated with either the intraday low or the closing low. Choose the type and length of low that best meet your technical analysis needs.
Interpreting the Distance To Lows
Recent lows often act as support during a downtrend, so it can be useful to see how far away the current price is from the low. The Distance To Lows indicator does this by determining how much the security's price would need to idecrease to reach the low. If the price decrease needed is small, the stock is close to the support low and may be heading for a pullback or a change in trend. Chartists should assess momentum and other technicals to determine whether a bounce or reversal is more likely.
In the chart above, Intuit (INTU) made new lows just above 350.00 in late February and early April, touching the zero line of the Distance To Lows indicator both times. In late May, price gapped down well below those prior lows, and that support level became resistance that price could not rise above. Intuit continues to make new lows in June. While price has bounced off the most recent 52-week low, the Distance To Lows value for the latest bar on the chart is 1.52%, meaning it only needs to decrease in price by 1.52% to make another 52-week low.
Cool Tip: Another way to look at this same information is with the Distance From Lows indicator, which measures how far away price is from a previous low.
The Bottom Line
Plotting the historical Distance To Lows values on the chart allows chartists to see at a glance how much price must decrease to reach a previous low, but also whether or not it's getting closer to that goal over time. Because previous lows often act as support, this valuable information can help traders to identify potential bounces and reversals, as well as time trade entries and exits.
As with all indicators, traders should use the Distance To Lows indicator in conjunction with other indicators and analysis techniques.
Charting with the Distance To Lows
The Distance To Lows indicator can be added to SharpCharts and ACP Charts.
Using with SharpCharts
Distance To Lows 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 To Lows indicator is added to the chart with the default settings. The first parameter determines the length of the low: 52W (52 weeks, the default), 9M (9 months), 6M (six months), or 3M (three months). The second parameter indicates whether the closing low or the intraday low is used. To configure the indicator for intraday lows, replace the "CLOSE" with "INTRADAY".
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Learn More: For more details on the parameters used to configure Distance To Lows indicators, please see our SharpCharts Parameter Reference in the Support Center.
Using with StockChartsACP
The Distance To Lows 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 low, but the length and type of low can be adjusted to meet your technical analysis needs.
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