HIPs and LOPs are HIgh Points and LOw Points. HIPs and LOPs are often called pivots, but as we use the term Pivot for one of our proprietary indicators we'll stick with HIPs and LOPs.
A HIP is a bar with a high that is higher than the bar before it or the bar after it.
On the charts, a HIP is represented by a "H" above the day it occured.
A LOP is a bar with a low that is lower than the bar before it or the bar after it.
On the charts, a LOP is represented by a "L" below the day it occured.
Origin:
The origin of the concept is most likely Henry Wheeler Chase's ringed highs and lows from the 1930s. In that era traders recorded prices on columnar pads for analysis and circled a high that was higher than the high above it or below it, or a low that was lower than the low above it or below it.
What it does:
In an upswing HIPs and LOPs will occur in an orderly progression higher and vice versa.
In a consolidation they will form no discernable pattern.
HIPs and LOPs are very useful for identifying short-term resistance and support and can be used as markers in a swing trading approach. They can also be used to identify stop levels and as trend identifiers in the wake of a Squeeze. They are also useful in pattern recognition. For example, a W bottom will consist of a LOP, a HIP and then a LOP.
HIPs and LOPs are one of the oldest and most basic technical tools. Careful study of these crucial markers will reward you with a better understanding of the basic structure of price and market dynamics.
