| Posted in PREPARING FOR THE MARKET DAY | Posted on
Support-resistance (S/R) organizes the charting landscape into well-marked levels that predict
swings and breakouts. Price action at these important boundaries depends on their unique
characteristics and specific locations within the trend-range axis. Stocks can swing back and forth
across a central S/R pivot rather than find a floor or ceiling. Support-resistance may present an
absolute barrier that cannot be crossed or exhibit elasticity that can be stretched but not broken. In
common horizontal S/R, resistance becomes support when price mounts it and vice versa when it
falls through. Swing traders earn their livelihoods as they find and execute setups along S/R
interfaces.
Diverse S/R boundaries print on every chart in all time frames. Most carry a unique load factor and
will break when buying or selling intensity exceeds it. Once price pierces a level, it normally
expands toward the next S/R barrier. This mechanism provides the source for many profitable
strategies. The classic swing trade buys at support and sells at resistance. Therefore, these levels
define both reward and risk. Look to buy support when the nearest resistance is far above, and look
to sell resistance when the nearest support is far below. But make sure the landscape hides no
dangerous obstacles. A single overlooked level can have disastrous results.
Profitability depends on accurate prediction at S/R interfaces. The skilled eye must quickly locate
these points and evaluate their impact on every setup. Begin with a dense chart template that layers
all types of S/R boundaries directly on price. Then study the individual elements and how each
affects reward:risk. Start with highs and lows in the longest applicable time frame and work down
to recent price action. Pay special attention to shock events that may produce significant S/R in a
single bar. For example, strong gaps can stay unfilled for many years.
Apply a simple hierarchy that rates the importance of each S/R feature. Horizontal levels that persist
over time carry more weight than those from shorter periods. Major highs and lows provide
stronger S/R than moving averages or other price derivatives. Hidden levels offer cleaner
opportunities than well-known ones that invite whipsaws and fading strategies. S/R strengthens
when many barriers converge
swings and breakouts. Price action at these important boundaries depends on their unique
characteristics and specific locations within the trend-range axis. Stocks can swing back and forth
across a central S/R pivot rather than find a floor or ceiling. Support-resistance may present an
absolute barrier that cannot be crossed or exhibit elasticity that can be stretched but not broken. In
common horizontal S/R, resistance becomes support when price mounts it and vice versa when it
falls through. Swing traders earn their livelihoods as they find and execute setups along S/R
interfaces.
Diverse S/R boundaries print on every chart in all time frames. Most carry a unique load factor and
will break when buying or selling intensity exceeds it. Once price pierces a level, it normally
expands toward the next S/R barrier. This mechanism provides the source for many profitable
strategies. The classic swing trade buys at support and sells at resistance. Therefore, these levels
define both reward and risk. Look to buy support when the nearest resistance is far above, and look
to sell resistance when the nearest support is far below. But make sure the landscape hides no
dangerous obstacles. A single overlooked level can have disastrous results.
Profitability depends on accurate prediction at S/R interfaces. The skilled eye must quickly locate
these points and evaluate their impact on every setup. Begin with a dense chart template that layers
all types of S/R boundaries directly on price. Then study the individual elements and how each
affects reward:risk. Start with highs and lows in the longest applicable time frame and work down
to recent price action. Pay special attention to shock events that may produce significant S/R in a
single bar. For example, strong gaps can stay unfilled for many years.
Apply a simple hierarchy that rates the importance of each S/R feature. Horizontal levels that persist
over time carry more weight than those from shorter periods. Major highs and lows provide
stronger S/R than moving averages or other price derivatives. Hidden levels offer cleaner
opportunities than well-known ones that invite whipsaws and fading strategies. S/R strengthens
when many barriers converge
