Direct Answer
The previous day's high and low are the highest and lowest prices traded during the prior session. They are carried forward as reference levels for the current session. Trading above the prior high or below the prior low means the current session has moved outside the previous day's range.
Previous Day High/Low: Formula, Meaning, Signals, Examples and How to Use It
How Is Previous Day High/Low Calculated?
The previous day's high and low are the highest and lowest prices traded during the prior session. They are carried forward as reference levels for the current session.
Formula: PDH = high of the previous session; PDL = low of the previous session; range = PDH - PDL
Inputs:
- Daily high and low of the prior session
- Definition of the session (regular hours or extended)
Worked example. A previous-day high of 105 and low of 97 give a prior range of 8.00. The inputs are illustrative numbers, not market data.
Reading it. Trading above the prior high or below the prior low means the current session has moved outside the previous day's range. The prior range also gives context for how wide a normal day has been.
Limits. Whether the levels include pre-market and after-hours trading changes their values, so sources may disagree. A single day's extremes can come from a brief spike.
What is Previous Day High/Low?
The previous day's high and low are the highest and lowest prices traded during the prior session. They are carried forward as reference levels for the current session.
How to use Previous Day High/Low
Trading above the prior high or below the prior low means the current session has moved outside the previous day's range. The prior range also gives context for how wide a normal day has been. A reading alone is never a buy or sell signal; it needs context from price structure, volume, volatility and the broader market regime.
Strengths
- Both levels are actual traded prices known with certainty at the next open, with no parameters or smoothing to choose.
- Their difference gives yesterday's full range, a size reference that today's extent so far can be compared against.
- Reproducible when the formula and data convention are fixed.
Weaknesses and limitations
- After a large gap, today's trading can occur entirely outside the previous range, leaving both levels far from the action.
- Neither level records the time of day it was set, so an opening spike and a late-session extreme are treated alike.
- Correlated indicators can create false confidence by repeating the same underlying information.
Editorial and risk note
This page is educational content, not individualized investment advice. It should not imply guaranteed prediction, accuracy or outperformance.
Frequently Asked Questions
Is Previous Day High/Low a buy or sell signal?
No. Trading above the prior high or below the prior low means the current session has moved outside the previous day's range. Whether the levels include pre-market and after-hours trading changes their values, so sources may disagree. A trade built on it still needs a trigger, an invalidation rule, a position size and realistic execution assumptions.
What is the best setting for Previous Day High/Low?
Previous Day High/Low is computed from daily high and low of the prior session; definition of the session (regular hours or extended), so the choices that matter are the data convention and the window it is read over. Test those across instruments, regimes and out-of-sample periods instead of fitting one historical winner.
Can Previous Day High/Low be used by itself?
Whether the levels include pre-market and after-hours trading changes their values, so sources may disagree. A single day's extremes can come from a brief spike. For that reason it is read next to measures of direction, participation, valuation, liquidity and risk, not alone.
Does Previous Day High/Low work on every timeframe?
The calculation (PDH = high of the previous session; PDL = low of the previous session; range = PDH - PDL) can be run on any bar size, but behavior is not portable: a reading on a five-minute chart describes a very different market window from the same reading on a daily chart. Validate the exact timeframe before relying on it.
Why does Previous Day High/Low give false signals?
After a large gap, today's trading can occur entirely outside the previous range, leaving both levels far from the action. Neither level records the time of day it was set, so an opening spike and a late-session extreme are treated alike. Lag, noise and regime changes add to this, because market participants react to new information after the reading is calculated.
How should Previous Day High/Low be backtested?
Rebuild Previous Day High/Low from daily high and low of the prior session using point-in-time data, write the rules before testing, include delisted securities where relevant, model realistic fills and costs, reserve a validation sample and compare with a simpler baseline.