Actual Support and Resistance Indicators

[cerno]

Calculating support and resistance levels based on historical price action is simply an assumption that buyers or sellers will re-appear at a particular level because that level had support or resistance yesterday or maybe several hours ago. It just doesn't play out that way often enough to make that approach useable in my experience. I attached a chart from an analysis service I subscribe to and their indicators show me when the market is running into support or resistance in real-time based on their analysis of program trading in equities, futures, options, and etf's. The analysis is quite different than anything else I have used before. When the coloring is too confusing I know not to trade, when I can see something obvious happening I can trade with a little more confidence and hang in the trade longer. I asked them for a big chart and I added the lines myself to make my point. Just thought it would be informative.

 

[FulcrumTrader]

Calculating support and resistance levels based on historical price action is simply an assumption that buyers or sellers will re-appear at a particular level because that level had support or resistance yesterday or maybe several hours ago. It just doesn't play out that way often enough to make that approach useable in my experience.

Excellent point and I fully agree with your thoughts. The only support and resistance levels that I track at all times and actually pay attention to are created from zones of resting accumulated inventory. The levels of price where accumulated inventory (those building LONG or SHORT positions) was initiated and developed is not the only part of the picture imo. You should also track the Delta Volume Distribution to see the evidence within the traded order flow for the proper indexing of the accumulated zones of inventory.

As a trader, it is a definite advantage to have indexed the exact areas of both price AND Cumulative Delta where commercials accumulated positions as price traded to various levels throughout the day. It is at these exact zones of resting inventory where accumulated and held inventory offer some of the best true support and resistance levels I have ever found.....and that makes sense actually. Day after day, and week after week, I will watch realtime as price respects these same areas of resting held inventory that I track for all futures instruments I trade. It made sense to me when I first discovered these patterns years ago and it still makes total sense to me today. Those holding accumulated inventory WILL DEFEND their positions......arbitrary support and resistance levels drawn with lines on a chart do not.

Fibs, waves, market profile, pitchforks, etc. do not ever defend their levels of support or resistance like a group of commercials holding 10,000 ES contracts "net" SHORT within a small zone of price!

 

[dcraig1]

Calculating support and resistance levels based on historical price action is simply an assumption that buyers or sellers will re-appear at a particular level because that level had support or resistance yesterday or maybe several hours ago. It just doesn't play out that way often enough to make that approach useable in my experience. I attached a chart from an analysis service I subscribe to and their indicators show me when the market is running into support or resistance in real-time based on their analysis of program trading in equities, futures, options, and etf's. The analysis is quite different than anything else I have used before. When the coloring is too confusing I know not to trade, when I can see something obvious happening I can trade with a little more confidence and hang in the trade longer. I asked them for a big chart and I added the lines myself to make my point. Just thought it would be informative.

It might be a bit more informative if the chart was accompanied by some explanation. It is incomprehensible as it is.

 

[Fast Eddy]

Calculating support and resistance levels based on historical price action is simply an assumption that buyers or sellers will re-appear at a particular level because that level had support or resistance yesterday or maybe several hours ago. It just doesn't play out that way often enough to make that approach useable in my experience. I attached a chart from an analysis service I subscribe to and their indicators show me when the market is running into support or resistance in real-time based on their analysis of program trading in equities, futures, options, and etf's. The analysis is quite different than anything else I have used before. When the coloring is too confusing I know not to trade, when I can see something obvious happening I can trade with a little more confidence and hang in the trade longer. I asked them for a big chart and I added the lines myself to make my point. Just thought it would be informative.

Yeah pretty colors, but it's challenging to see.