Digital asset prices fluctuate all the time. Different catalysts may cause a surge in the market price of any security, especially the more volatile ones like some currency pairs, stocks and cryptocurrencies. Analyzing the highs and lows and their root causes is important for traders to make better trading decisions.
ATH definition
ATH or all-time high refers to the highest price point reached by an asset throughout its trading history ever since its debut on the market. In addition to ATH, traders and investors often use periodical highs. For instance daily highs and lows. These points can serve as support and resistance levels.
Why is understanding ATH important for traders?
- The All-time high figure of a given security might indicate possible future catalysts that could send their price to new heights
- Past results do not guarantee future performance – the security might never actually reach their all-time high price again in the future
- The ATH figure for many securities might be very outdated and not indicative of future developments
- When ATH is reached, security prices enter uncharted territory where there are no prior prices to serve as support and resistance. Understanding ATH in trading can help traders better navigate on such occasions.
ATH explained in more detail
Looking through and analyzing the price history of securities is important in identifying the events that caused the major ups and downs for the asset in question.
For stocks this might be anything from operational performance and financial results to economic booms and busts, policy changes, etc.
Measuring the ATH in forex pairs can be a bit trickier. While the figure might be available for all traders to see, it might not be indicative of anything of substance at all. Since currency pairs represent actual countries, analyzing a 50-year price history might not give much insight into future prices at all. Countries go through economic cycles, governments and financial policies change and develop – some currencies might be dropped altogether.
The comparison of shorter time periods with more uniformity can be much more useful for traders, as historic data is often readily available to analyze.
ATH is a great tool for measuring the price history of an asset but does not hold much weight where future decision-making is concerned.
Example of ATH is forex trading
To consider an example of ATH in forex, we can look at the all-time chart of the US dollar index, DXY. The index reached ATH in 1985, at 164.72, which happened after the end of recession in 1982 and the Tax Equity and Fiscal Responsibility Act of 1982 was passed by the US Congress.
While the chart presents an important picture with historical context for analysis, the political and economic climate is ever-changing. The latest increase visible on the chart can be attributed to the Federal Reserve’s hawkish stance on tackling inflation and increasing interest rates.
FAQs on ATH
What does ATH mean in trading?
In trading ATH refers to the all-time high price reached by an asset. Understanding the events that lead to the ATH figure can be important in determining the factors that can heavily affect the asset’s price.
What is the ATH for the dollar?
The dollar index (DXY) reached ATH in 1985, when the figure reached 164.72. The index that measures the performance of the greenback against six major currencies (EUR, CAD, CHF, JPY, GBP, SEK), surged after the recession ended in the US in 1982 and a new legislature was introduced (The Tax Equity and Fiscal Responsibility Act of 1982).