What Is the 52-Week Range?

The 52-week range is a data point traditionally reported by printed financial news media, but more modernly included in data feeds from financial information sources online. The data point includes the lowest and highest price at which a stock has traded during the previous 52 weeks.

Investors use this information as a proxy for how much fluctuation and risk they may have to endure over the course of a year should they choose to invest in a given stock. Investors can find a stock’s 52-week range in a stock’s quote summary provided by a broker or financial information website. The visual representation of this data can be observed on a price chart that displays one year’s worth of price data.

Understanding the 52-Week Range

The 52-week range can be a single data point of two numbers: the highest and lowest price for the previous year. But there is much more to the story than these two numbers alone. Visualizing the data in a chart to show the price action for the entire year can provide a much better context for how these numbers are generated.

Since price movement is not always balanced and rarely symmetrical, it is important for an investor to know which number was more recent, the high or the low. Usually an investor will assume the number closest to the current price is the most recent one, but this is not always the case, and not knowing the correct information can make for costly investment decisions.

Two examples of the 52-week range in the following chart show how useful it might be to compare the high and low prices with the larger picture of the price data over the past year.

These examples show virtually the same high and low data points for a 52-week range (set 1 marked in blue lines) and a trend that seems to indicate a short-term downward move ahead.

The overlapping range on the same stock (set 2 marked in red lines) now seems to imply that an upward move may be following at least in the short term. Both of these trends can be seen to play out as expected (though such outcomes are never certain). Technical analysts compare a stock’s current trading price and its recent trend to its 52-week range to get a broad sense of how the stock is performing relative to the past 12 months. They also look to see how much the stock’s price has fluctuated, and whether such fluctuation is likely to continue or even increase.

The information from the high and low data points may indicate the potential future range of the stock and how volatile its price is, but only the trend and relative strength studies can help a trader or analyst understand the context of those two data points. Most financial websites that quote a stock’s share price also quote its 52-week range. Sites like Yahoo Finance, Finviz.com and StockCharts.com allow investors to scan for stocks trading at their 12-month high or low.

Current Price Relative to 52-Week Range

To calculate where a stock is currently trading at in relations to its 52-week high and low, consider the following example:

Suppose over the last year that a stock has traded as high as $100, as low as $50 and is currently trading at $70. This means the stock is trading 30% below its 52-week high (1-(70/100) = 0.30 or 30%) and 40% above its 52-week low ((70/50) – 1 = 0.40 or 40%). These calculations take the difference between the current price and the high or low price over the past 12 months and then convert them to percentages.

52-Week Range Trading Strategies

Investors can use a breakout strategy and buy a stock when it trades above its 52-week range, or open a short position when it trades below it. Aggressive traders could place a stop-limit order slightly above or below the 52-week trade to catch the initial breakout. Price often retraces back to the breakout level before resuming its trend; therefore, traders who want to take a more conservative approach may want to wait for a retracement before entering the market to avoid chasing the breakout.

Volume should be steadily increasing when a stock’s price nears the high or low of its 12-month range to show the issue has enough participation to break out to a new level. Trades could use indicators like the on-balance volume (OBV) to track rising volume. The breakout should ideally trade above or below a psychological number also, such as $50 or $100, to help gain the attention of institutional investors.

What Is 52-Week High/Low?

The 52-week high/low is the highest and lowest price at which a security, such as a stock, has traded during the time period that equates to one year.

Understanding the 52-Week High/Low

A 52-week high/low is a technical indicator used by some traders and investors who view these figures as an important factor in the analysis of a stock’s current value and as a predictor of its future price movement. An investor may show increased interest in a particular stock as its price nears either the high or the low end of its 52-week price range (the range that exists between the 52-week low and the 52-week high).

The 52-week high/low is based on the daily closing price for the security. Often, a stock may actually breach a 52-week high intraday, but end up closing below the previous 52-week high, thereby going unrecognized. The same applies when a stock makes a new 52-week low during a trading session but fails to close at a new 52-week low. In these cases, the failure to register as having made a new closing 52-week high/low can be very significant.

One way that the 52-week high/low figure is used is to help determine an entry or exit point for a given stock. For example, stock traders may buy a stock when the price exceeds its 52-week high, or sell when the price falls below its 52-week low. The rationale behind this strategy is that if a price breaks out from its 52-week range (either above or below that range), there must be some factor that generated enough momentum to continue the price movement in the same direction. When using this strategy, an investor may utilize stop-orders to initiate new positions or add on to existing positions.

It is not uncommon for the volume of trading of a given stock to spike once it crosses a 52-week barrier. In fact, research has demonstrated this. According to a study called “Volume and Price Patterns Around a Stock’s 52-Week Highs and Lows: Theory and Evidence,” conducted by economists at Pennsylvania State University, the University of North Carolina at Chapel Hill, and the University of California, Davis in 2008, small stocks crossing their 52-week highs produced 0.6275% excess gains in the following week. Correspondingly, large stocks produced gains of 0.1795% in the following week. Over time, however, the effect of 52-week highs (and lows) became more pronounced for large stocks. On an overall basis, however, these trading ranges had more of an effect on small stocks as opposed to large stocks.

52-Week High/Low Reversals

A stock that reaches a 52-week high intraday, but closes negative on the same day, may have topped out. This means that its price may not go much higher in the near term. This can be determined if it forms a daily shooting star, which occurs when a security trades significantly higher than its opening, but declines later in the day to close either below or near its opening price. Often, professionals, and institutions, use 52-week highs as a way of setting take-profit orders as a way of locking in gains. They may also use 52-week lows to determine stop-loss levels as a way to limit their losses.

Given the upward bias inherent in the stock markets, a 52-week high represents bullish sentiment in the market. There are usually plenty of investors prepared to give up some further price appreciation in order to lock in some or all of their gains. Stocks making new 52-week highs are often the most susceptible to profit taking, resulting in pullbacks and trend reversals.

Similarly, when a stock makes a new 52-week low intra-day but fails to register a new closing 52-week low, it may be a sign of a bottom. This can be determined if it forms a daily hammer candlestick, which occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or near its opening price. This can trigger short-sellers to start buying to cover their positions, and can also encourage bargain hunters to start making moves. Stocks that make five consecutive daily 52-week lows are most susceptible to seeing strong bounces when a daily hammer forms.

52-Week High/Low Example

Suppose that stock ABC trades at a peak of $100 and a low of $75 in a year. Then its 52-week high/low price is $100 and $75. Typically, $100 is considered a resistance level while $75 is considered a support level. This means that traders will begin selling the stock once it reaches that level and they will begin purchasing it once it reaches $75. If it does breach either end of the range conclusively, then traders will initiate new long or short positions, depending on whether the 52-week high or 52-week low was breached.