TL;DR. Equal Highs and Lows marks two swing highs in a row at nearly the same price (or two swing lows). Traders put their stops a little beyond such a double top or bottom, so the level is a pool of resting orders that price is often drawn to. The level sits at the higher of the two highs, or the lower of the two lows, and holds until the next equal pair forms.
What it measures
- Where stops cluster. A double top invites short sellers to place stops a few ticks above it and breakout buyers to place orders there. Both sit at the same price.
- A level in price units. The output is a price you can compare the current price with, like any other level.
- Confirmed swings only. A swing counts from the bar that confirms it, a few bars after the swing itself, so the level never repaints.
Formula
Inputs in AlgoLift
| Setting | Default | Range | Notes |
|---|---|---|---|
| Bars before a swing | 5 | 1 to 500 | How many bars before a swing it must stand strictly beyond, as the Swing Points tool. |
| Bars after a swing | 5 | 1 to 500 | How many bars after a swing it must stand strictly beyond. The swing is used from that bar on, so the level comes this many bars after the second swing. |
| Tolerance (ATRs) | 0.25 | 0 to 10 | How close two swings must be to count as equal, in multiples of the 14-bar ATR. 0 requires the exact same price. |
Outputs in AlgoLift
| Handle | Type | Plotted | Notes |
|---|---|---|---|
| Equal highs | Numeric | Always | The higher of the last two equal swing highs, in price units, dotted over the candles. Empty before the first pair. |
| Equal lows | Numeric | Always | The lower of the last two equal swing lows. Empty before the first pair. |
How to read it
- Price approaching Equal highs from below: the stops above the double top are the obvious target. A run through and back below it is a classic sweep.
- Price closing well beyond the level: the orders there were absorbed and price kept going; the level has turned from a target into a breakout point.
- A level that has held for a long time: more stops have gathered beyond it, so the reaction when it is reached tends to be sharper.
Best in, worst in
Best in ranges and slow trends, where swings repeat at similar prices and the stops beyond them build up.
Worst in fast trends, where swings rarely line up, and with a wide tolerance, where almost any two swings count as equal.
Three setups
1. Sweep of equal lows
Long when the bar's low trades below Equal lows and the Liquidity Sweep node fires bullish on the same bar: the stops under the double bottom were taken and rejected.
2. Breakout through equal highs
Long when the close is above Equal highs by more than a tenth of an ATR, read through a Distance node: the orders above the double top were absorbed and price held above them.
3. Equal highs as a target
For a long from lower down, place the target a few ticks below the Equal highs level through Set Target Profit, so the exit fills before the crowd's orders at the level.
Common mistakes
- A tolerance too wide. At 1 ATR or more, swings a full bar's range apart count as equal and the level loses its meaning. 0.1 to 0.3 is the usual range.
- Expecting the level at the swing. The level appears on the bar that confirms the second swing,
rightbars after it. That delay is what keeps it from repainting. - Treating a run through the level as a failure. Running the stops is what the level is for; judge the bar's close, not its extreme.
Equal Highs and Lows marks two swings at nearly the same price, where stops rest. The level is confirmed, never repaints, and holds until the next pair: a target for price as much as a barrier.