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Tuesday, May 01, 2007 12:16:51 PM
Market Structure Low (MSL)
A Market Structure Low (MSL) is the first sign of a potential reversal in prices from a downtrend to an up trend. It is usually made up of three price bars (or candles): A low, a lower low, and then a higher low. The “Low” is measured from the actual low of the candle, not the closing price. Ideally, as shown in Figure1, the Low and Lower Low will both be “down” bars (where the closing price is lower than the open price), whereas the third bar, the Higher Low, will be an up bar.
The MSL is actually triggered when prices subsequently move above the high of the third candle, as shown by the dotted line. Of course, it is dangerous to enter a long trade simply on the trigger of a MSL.
A Market Structure Low (MSL) is the first sign of a potential reversal in prices from a downtrend to an up trend. It is usually made up of three price bars (or candles): A low, a lower low, and then a higher low. The “Low” is measured from the actual low of the candle, not the closing price. Ideally, as shown in Figure1, the Low and Lower Low will both be “down” bars (where the closing price is lower than the open price), whereas the third bar, the Higher Low, will be an up bar.
The MSL is actually triggered when prices subsequently move above the high of the third candle, as shown by the dotted line. Of course, it is dangerous to enter a long trade simply on the trigger of a MSL.
[chart]tbn0.google.com/images?q=tbn:oEjtXaIYVuW66M:sugarmtnfa
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