Technical analysts traders on FOREX have more than a few techniques and charts they utilize when attempting to predict the price movements by analysis of historical price activity. The most common technique and also the simplest way for understanding the general idea is the “high-low breakout” technique. Any chart has sequence of bars that are either going up, down or sideways. Almost any given day's highs and lows are different from the ones of the day before or the day tomorrow. This means today’s bar will make a higher “high” or a lower “low” compared to yesterday.

FOREX traders and investors find this information very powerful and are always trying to predict tomorrow's outcome. In order to foresee a trading opportunity one should find the average daily gap between the high of yesterday's high to the high of today's bar and the average daily distance between the low of yesterday's bar and the low of today's bar. If you want to try and do it yourself, start by tracking the highs and lows of each day. Then, deduct the high of today from yesterday's high and the low of today from yesterday low. When you have a decent amount of information (accumulated over a month or more) in a chart with five columns, date, open, high, low and close, you can calculate an average. After you have this data you can start calculating down today’s high minus yesterday's high (TH-YH) and yesterday's low minus today's low (YL-TL). In the "TH-YH" column write an entry only if today's high is greater than yesterday's high and in the "YL-TL write an entry only if today's low is lower than yesterday's low.

By using this information you can predict tomorrow’s higher high and lower low. You can apply this knowledge to improve your FOREX trading. There are a lot of ways to trade this setup (for instance, taking this down to a one minute chart and scalp the market with a very tight stop). Do not excuse yourself of taking note of the previous day's high and low, no matter what your trading decisions might be.