52-Week Range

130-30 Strategy

What is the 52 week range?

The 52-week range is a data point traditionally reported by the print financial news media, but more modern included in data feeds from online financial information sources. The data point includes the lowest and highest price at which a security has traded in the previous 52 weeks.

Investors use this information as an indicator of the magnitude of the fluctuations and the risks they may face in a year if they choose to invest in a given stock. Investors can find the 52 week range of a stock in the stock quote summary provided by a broker or financial reporting site. The visual representation of this data can be seen on a price graph that displays the value of one year of price data.

Key points to remember

  • The 52-week range is designated by the highest and lowest published price of a security in the previous year.
  • Analysts use this range to understand volatility.
  • Technical analysts use this range data, combined with trend observations, to get an idea of ​​trading opportunities.

Understanding the 52 week range

The 52-week range can be a single data point of two numbers: the highest and lowest price from the previous year. But there is much more in history than these two figures alone. Visualizing the data in a graph to show the price action for the whole year can provide a much better context for how these numbers are generated. As the price movement is not always balanced and rarely symmetrical, it is important for an investor to know which number was the most recent, the highest or the lowest. Usually an investor will assume that the number closest to the current price is the most recent, but this is not always the case, and not knowing the right information can make costly investment decisions.

Two examples of the 52-week range in the following graph show how useful it could be to compare high and low prices with the larger picture of price data over the past year.

52 weeks range (Set 1).

These examples show almost the same high and low data points for a range of 52 weeks (set 1 marked in blue lines) and a trend that seems to indicate a short-term downtrend.

52 weeks range (Set 2)

52 weeks range (Set 2).

The overlap range on the same stock (set 2 marked in red lines) now seems to imply that an upward movement could follow at least in the short term. Both of these trends can occur as expected (although such results are never certain). Technical analysts compare the current price of a stock and its recent trend to its 52-week range to get a general idea of ​​the stock’s performance over the past 12 months. They are also looking to see to what extent the stock price has fluctuated and whether this fluctuation is likely to continue or even increase.

Information from high and low data points can indicate the potential future range of the security and price volatility, but only studies of trend and relative strength can help a trader or analyst understand the context of these two points. of data. Most financial websites that report a share price also list its 52-week range. Sites like Yahoo Finance, Finviz.com and StockCharts.com allow investors to search for stocks trading at their 12-month high or low. (For more information, see: Getting started with stock filters.)

Current price compared to the 52 week range

To calculate where a security is currently trading against its 52-week high and low, consider the following example:

Suppose that over the past year, a stock has traded up to $ 100, up to $ 50, and is currently trading at $ 70. This means that the stock is trading 30% below its 52-week high (1- (70/100) = 0.30 or 30%) and 40% above its 52-week low (( 70/50) – 1 = 0.40 or 40%). These calculations take the difference between the current price and the high or low price in the past 12 months and then convert them into percentages.

52 week range trading strategies

Investors can buy a stock when it is trading above its 52 week range, or open a short position when it is trading below. Aggressive traders could place a stop-limit order slightly higher or lower than the 52-week trade to make up for the initial breakout. The price often returns to the breakout level before resuming its trend; therefore, traders who wish to take a more conservative approach may want to wait for a retracement before entering the market to avoid chasing the breakout.

The volume should increase steadily when the stock price approaches the highest or the lowest of its 12-month range to show that the problem has enough participation to reach a new level. Trades could use indicators such as volume on sale (OBV) to track the increase in volume. The breakout should ideally trade above or below a psychological number as well, like $ 50 or $ 100, to help grab the attention of institutional investors. (For more information, see: How to use volume to improve your trading.)

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