Lowest Low Value

What Is the Lowest Low Value Overlay?

The Lowest Low Value overlay plots the lowest price reached in a specific lookback period. Previous lows can act as a natural support line, and chartists may use them to define entry or exit points.

Calculating the Lowest Low Value

The calculation is extremely simple. For each data point, find the lowest low achieved during the specified number of lookback periods.

Note: As the name implies, the Lowest Low Value overlay uses the lowest intraday low value, rather than the lowest closing value.

The default lookback period for this overlay is set to 14 periods, but this can be adjusted for your preferred investing timeframe. To use the 52-week low, choose 52 periods on a weekly chart or 252 periods on a daily chart.

Interpreting the Lowest Low Value

If the security continues to make new lows, the Lowest Low Value line will continue moving downward as new lows are set. If the security is no longer making new lows, the line flattens out and starts turning up as older lows are dropped from the calculation. Once prices drop again, they will move towards the Lowest Low Value line once again.

Previous lows often act as a natural support line. There must be significant negative momentum for price to continue pushing below a previous low. The longer the lookback period, the more resistance there will be to dropping below that long-term low.

In the chart above, AMD drops dramatically and begins setting new lows in June, pushing the LLV line lower. After that initial push, however, it did not really break dramatically below the line. Instead, price bounced off the line several times between June and October, dropping a little further each time, resulting in a stair-step pattern to the LLV line.

Because the lowest low is by definition an extreme price level, the Lowest Low Value can be used to identify long entry points or exit points when shorting. If price is approaching or surpassing the LLV line, use other indicators to determine the strength of the downward move. If it's weak, this could indicate a coming reversal and a good time to enter a long position.

The Bottom Line

The Lowest Low Value often acts as potential support line, so it can be a useful tool for identifying potential downtrend reversals and entry/exit points. Not all support lines hold, though, so it is important to use other indicators and analysis techniques along with the Lowest Low Value to assess the strength of the move.

Charting the Lowest Low Value

Using with StockChartsACP

This overlay can be added from the Chart Settings panel for your StockChartsACP chart. Chartists often plot both the Highest High Value and the Lowest Low Value on the same chart, as shown below. Taken together, these can act like support and resistance bands encompassing the recent trading range.

Click here for a live version of this chart.

By default, this overlay looks for the lowest low across the last 14 periods, but this parameter can be adjusted to meet your technical analysis needs.