Support/Resistance tip

wallmann

Junior member
17 0
Resistance levels are 'pivot points' usually identified beforehand by a previous low, or high and major moving averages. On the Intraday chart and daily chart it could be defined by the 20, 50 and 200 period (or day) moving averages. The more times a 'support' level is hit, the price retreats. Buyers will buy near these areas of resistance, or basing expecting a breakout. Stocks nearing resistance levels are like express trains stopping at a station for a certain amount of time before they 'take off'.

We look for stocks breaking out of strong support and/or resistance on heavier volume than usual. Usually earnings reports and reports of increasing earnings expectations will cause a stock to move above its previous pivot point and run up considerably. A profit surprise on stocks with high fundamental rank and relative strength rank will cause resistance levels to be broken down and new highs established. Momentum can also trigger reversals of support levels irrespective of fundamental or any news. The 2:00 and 3:00 reversal periods can cause reversals of oversold stocks leading to bounces above prior support levels. (IMO)
 

kevinmcm

Active member
220 2
Another tip. Never use them on their own. Always combine them with at lesat one other technical indicator. They are only a guide to potential turning points. An example of where it can go wrong is from yesterday when FTSE was hitting its S1 level around 4210 and subsequently tumbled through S2 & S3 before making a small recovery.

Kevin.
 

frankidee

Newbie
1 0
All I'm reading about 'pivots in this forum is taking the past range to provide support and resistance, sadly the market doesn't consist of 1 days trading.

What about the pivot of the past 5 days or the past 3 weeks.

Have a look at this site and you'll get a better picture of the higher timeframe pivots using the past 3-week ranges and 3-months ranges.

http://datafeeds.com.au/trade.html

when you start to look at the Euro market and UK, you will notice that the movements are not the 3-periods but the movements occur over the 5-periods.

So when trading the extreme of the 5-periods provide a better resistance and support zone than trading a single pivot.

cheers
 
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