52-week high/low

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What is a 52-week high?

A 52-week high is the highest price at which an asset has been traded over the prior 52 weeks.
This information is important to some investors, who might see it as an indicator that they use as part of their investment strategy.

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How does a 52-week high work?

Almost all stock exchanges have operating hours during which trading takes place. The London Stock Exchange, for example, is open for trading from 08:00 AM until 04:30 PM.

The final price at which a stock can be bought during trading hours is known as the ‘closing price’. This is the price which is generally used to determine if a stock has reached a 52 week high.

Analysts will look at the closing price of a stock and compare it to all the other closing prices that the stock has seen over the prior 52 weeks. If it is higher than all the other closing prices, that will mean it’s a 52 week high.

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Why is a 52-week high important?

There is a lot of debate as to how meaningful a 52 week high actually is. It’s generally seen as an indicator for traders using technical analysis.

Even amongst those that do believe 52 week highs hold some meaning, there is uncertainty as to how it should impact the investment decision-making process.

Some people argue that the sentiment which caused a stock to increase in value is likely to continue and it will drive its price higher.

On the other hand, if the stock bounces back then people might see that highest price as a ceiling beyond which the stock is unlikely to rise in price.

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