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How We Use Previous Day High and Low (PDH/PDL) to Spot Traps and Set Targets
Two of the most useful things on my chart aren't indicators. They're horizontal lines at yesterday's high and yesterday's low.
The previous day high and low (PDH and PDL) take a sentence to define and a lot longer to use well. I check them before almost anything else, because of the orders that tend to gather around it.
What the indicator does
It draws a thin line at the prior session's high and another at its low, directly on price, so it costs you nothing in screen space to leave running. Colors are adjustable, and you can set alerts to fire when price reaches either level.
One setting to know before you use it: the levels reset at the New York close, 5pm ET, not at midnight in your time zone. "Yesterday" means the session that ended at the close. If your lines don't match someone else's chart, the session boundary is almost always the reason.
Already know why these levels matter? Skip to the download. Otherwise, here's the reasoning.
A level is a crowd
Everyone with a chart open can see yesterday's high. Around that one price you'll typically find shorts with stops just above it, breakout traders with buy stops waiting just above it, sellers treating it as resistance, and longs taking profit into it.
Four groups, four different plans, one price. The same thing happens in mirror image at yesterday's low.
That concentration of resting orders is what I mean by liquidity- just a place where a lot of orders are probably sitting. Obvious levels accumulate them, and price is drawn to where the orders are, because that's where size can actually get filled.
Notice the word probably. No one can see the full order book in a decentralized FX market.
Anyone selling you an indicator that claims to show exactly where retail stops are sitting is selling you a story, and a lot of newer traders pay for that story every month.
Now, if seeing the orders is what you’re really after, and honestly, it’s a good thing to want, spot FX just isn’t the place for it. Futures is. One exchange, one book, nothing hidden behind fifty different brokers. I wrote about how I use Bookmap on futures to see where the big orders are waiting.
The more visible the level, the more it matters. Yesterday's high and low are about as visible as levels get.
What these lines are for
Marking location. Price drifting through the middle of yesterday's range tells you very little. Price pressing into yesterday's high tells you something. Price that broke yesterday's low and immediately reclaimed it tells you something else entirely. The candle could be identical in all three places. Where it prints is what gives it meaning.
A pattern without location isn't a setup, and PDH and PDL are the cheapest location you'll ever add to a chart.
Where it goes wrong
A beginner's instinct is to treat yesterday's high as resistance and sell as soon as price touches it. Does it work? Sometimes, yea. That is how most people (who don't know what they are doing) trade. And they become fodder for the field.
Sometimes price touches the area and immediately rejects, other times price goes straight through and keeps running, and you're holding a short built on nothing more than a line, telling yourself it has to come back. It doesn't have to. Same at the low, but in reverse.
The level isn't telling you what will happen. It's telling you where something is likely to happen.
Breaking a level and holding it are different things
Plenty of traders are taught to trade the break: buy when price clears yesterday's high, sell when it loses yesterday's low. Sometimes that's exactly right. The breakout is real and the market keeps going.
But look at what the break does mechanically. It triggers the stops sitting above the high and fills the breakout orders resting there. For a minute it looks legitimate. Then, if that buying was mostly triggered orders rather than genuine new demand, price stalls and slips back under the level. Now the breakout buyers are underwater, their stops sit just below, and those stops become fuel for the move the other way.
That's a liquidity sweep: price runs through an obvious level, takes the orders sitting there, and reverses.
So when price pokes above PDH and slides back under, the question isn't buy or sell. It's whether that was expansion or a trap, and at the moment of the break you genuinely can't tell. A real breakout tends to break, build structure beyond the level, retest, and continue. A trap breaks, collects, and fails. They look the same for the first few candles, which is why we don't trade the break itself. We trade what price does after it.
Let the retest decide
If price breaks above yesterday's high and holds, I'm not chasing it. I want to see it come back and test the level from above. If it falls back inside the range, I'm watching the next approach. Can it reclaim the high, or does the old high start rejecting it? Is structure turning over? Does momentum agree? Is there a second leg?
All of those get answered after the break. Waiting costs you the first few pips. Chasing can cost you the trade.
What the indicator shows you
We built the indicator to mark this for you, so here's what you're looking at.
Each day gets three lines: yesterday's high, yesterday's low, and the midpoint between them. When price trades through the high or low and closes back inside, you get an orange Sweep marker. When it closes beyond the level, you get a teal Break. The panel in the corner tells you how big yesterday's range was compared to the 10-day average and where price is sitting right now, so you know at a glance whether yesterday was a normal day or a weird one.
This one week on EURUSD had pretty much every version of it.
Friday: a break that failed. Price pushed above Thursday's high around 1.1230 and printed a Sweep and a Break almost on top of each other. It went up another dozen pips or so, wicked to about 1.1243, and then fell apart. Back under the high, through the midpoint, down below 1.1190. If you'd bought that Break marker, you were offside within a few hours. This is exactly why the marker isn't an entry.
Start of the week: a sweep, then a break of the same level. Right at the Sunday open, price dipped just under Friday's low near 1.1187, printed a Sweep, and bounced up to the midpoint. Looked like a textbook reversal. Then later in that same session it came back down, broke the low for real, and ran to about 1.1155. Same level, same day, two different answers.
Tuesday: a sweep that turned the week. Right as the new day opened, price dipped just under Monday's low around 1.1153 and printed a Sweep. That was the low. It climbed almost 50 pips over the next day, nearly all the way back to Monday's high.
Wednesday: a break that's stalling. Price broke above Tuesday's high around 1.1205, printed a Break, and then just sat there before sliding back under. At the time of this screenshot it's back inside the range, in the lower half. I don't know yet how that one ends, and that's kind of the point.
Same markers, completely different outcomes. The marker tells you something happened at the level, not which way to trade it. That comes from what price does over the next few candles, and from everything else on your chart.
How it combines with the rest of the chart
On their own, these lines are just locations. They earn their place when you read them against everything else. Check out our Free chart tools, built for how we trade →
The Dealer Cycle. Trap, move, reverse. Obvious highs and lows are where traps get set and where expansion launches from, which is most of why these levels matter at all. So the useful question isn't whether price broke PDH. It's where we are in the cycle, and what a break here would logically be if that read is right. Sometimes the break is the move. Sometimes it's the trap that comes right before the move in the opposite direction. Learn The Dealer Cycle Method in Trade Tribe HQ.
TDI. Traders Dynamic Index shows the momentum of the push. If price makes a new high above PDH but the TDI doesn't make a matching momentum high, price extended and momentum didn't follow. Add an extreme reading, a Shark Fin or a hook back, and location, behavior, and momentum are all pointing the same way. That chart deserves your full attention. Get our TDI indicator for your chart.
EMAs. The Exponential Moving Averages give you structure; PDH and PDL give you location. Price sweeping yesterday's low into the 50 or 200, rejecting, and then the 13 and 50 starting to realign as price climbs back through is a very different statement from "PDL held, so I bought." That's price taking liquidity, rejecting it, and structure shifting underneath. Get our EMA indicator for your chart.
ADR and session timing. ADR Average Daily Range tells you how much of the day's typical range has already been spent. Reaching yesterday's high early with most of the range still available is one situation. Reaching it with the range nearly used up and momentum stretched is another. ADR doesn't make the level stronger; it tells you what condition price is in when it arrives. Get our ADR indicator for your chart.
Timing works the same way. Volume isn't spread evenly across the day, and session opens bring fresh order flow. Price sitting just under yesterday's high as a major session opens gets my attention. Price sweeping that high in the first half hour of the session gets all of it.
They're exits, too
These aren't only for spotting reversals. They're targets and decision points.
If you're long with yesterday's high overhead, that's a level price may be drawn toward. Weigh it against remaining ADR, current structure, momentum, and your read on the cycle, and you have a target that came from the chart instead of a number that felt reasonable.
When price gets there, you don't have to exit. But you're now standing where profit-taking, breakout entries, and stop runs are all hitting at once, so that's the moment to reassess momentum and remaining range and make the decision deliberately.
The principle is bigger than yesterday
PDH and PDL are the most consistent version of this, which is why they get marked every day. But the logic was never specific to yesterday. Recent swing highs and lows, session highs and lows, weekly highs and lows, major structural extremes: same reasoning each time. They're visible, traders act on them, and orders gather there. Once that clicks, you'll see these levels everywhere.
What we don't do
Short yesterday's high on contact.
Buy yesterday's low on contact.
Assume every break is a trap.
Assume every break is real.
Enter because price wicked through a level.
Treat these levels as walls. Price crosses them constantly.
Eventually you'll look at yesterday's high and think less about resistance and more about positioning: who's committed around that price, and what happens to them if it breaks or holds. The level tells you where things may get interesting. What price does around it tells you what's actually going on.
Put them on your chart
None of this helps if the levels aren't in front of you, and no one should be redrawing them by hand every morning. Our TradingView indicator marks PDH and PDL automatically, so they're already waiting when the new session opens.
FAQ
What are PDH and PDL in trading?
PDH is the previous day high and PDL is the previous day low: the highest and lowest prices from the last full trading day. Traders mark them because they're obvious levels that everyone can see, so a lot of stops and pending orders tend to collect around them.
Is the previous day high resistance?
Not reliably. Price sometimes rejects yesterday's high, but it also breaks through it constantly. It's more useful to treat PDH as a place where a lot of orders are sitting and watch what price does there, rather than selling it just because price reached it.
What's the difference between a sweep and a break?
A sweep is when price trades through yesterday's high or low and then closes back inside the previous day's range, usually after triggering the stops and breakout orders sitting beyond the level. A break is when price closes beyond the level and holds there. You can't tell them apart on the candle that pokes through, so it's better to wait and see whether price holds and retests or falls back inside.
What time does the previous day high and low reset?
The Trade Tribe indicator resets at the New York close, 5pm ET, which is the standard end of the forex trading day. If your levels don't match someone else's chart, a different session reset is almost always the reason.
Is a Sweep or Break marker a signal to enter a trade?
No. The markers show you that something happened at the level. Whether you trade it, and in which direction, depends on what price does over the next few candles and on the rest of your chart: where you are in the Dealer Cycle, what TDI and the EMAs are doing, how much of the ADR is used, and what session you're in.
Can I use PDH and PDL as profit targets?
Yes. If you're long and yesterday's high is above you, it's a logical place for price to get pulled toward, and the same goes for yesterday's low on a short. When price reaches the level, check momentum and remaining range before deciding whether to take profit or hold.
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