Support and Resistance

Eric Alyea

Master Sergeant
Support and Resistance

For me support and resistance is “Time period relevant”. What I mean by this, is that for each 1min, 15min, 30min, 1hr, 1day, 1month, you will get a different number value.
Here we get in to trending, moving averages and multiple moving averages.
OK if I heard that 3 years ago I would say, “You numbnut’s in poor man’s English, please”.
I had to make up something to memorize what the terms mean.
“Resistance” is when you jump up, the top of your head can only go so high, gravity pulls you back down.
“Support” is after you jumped up your feet hit the ground.
You can pogo stick to different high’s and pogo stick down a hill. Each different jump has it’s own circumstances in time.
Now we get into Fundamental’s vs Technical’s. If you are jumping on your pogo stick and don’t see the pot hole in the ground or the barn on fire, you crash or burn. You can’t trade with your “Ostrich head” in a technical cart.
Then your stupid, you didn’t check your fundamental reports (My workers knew to stop talking when a Dallas traffic report came on the radio, sometimes it was for us some times not).
If you are following a trend, i.e. Pogo sticking with a herd (Fibonacci go to the glossary and read each one, I call it following the band wagon) you may not know that at a certain point the lead guy is going to turn around and say hey you dummies go where you want I’m done and calling it a day. I don’t know why you followed me here, I’m going to the house.
Personally I like to eyeball the charts and use the cross hairs.
On you favorite time period chart take your cross hairs and match the line to eyeball the most tops of the candle bodies are or what ever you use. Write that number down. It will change. Go to a different time chart and do the same, again on other charts.
Use your brain. Sometimes the calculations are the way they are because the “Ubber banker/Troll’s” make them that way.
Figure out a line, back up 3 notches, and go for the conservative sure win.

I disavow all I have said above. You are on your own.

For fun I’ll dig up the numbers for the technical calculations of:
Pivot Point
S1, S2, S3
R1, R2, R3
and research the glossary, back later, I only have so many words I can type a day or explode.
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Hope you're still in one piece Eric. That is quite an entertaining way of putting it. I like the analogies!

The million dollar question becomes what specific indicator do you use for it. They come in different forms (pivots, trendlines, horizontal lines, moving averages, etc) but they are most commonly agreed upon through the use of horizontal lines that you place on your trading platform manually.

Also, many people confuse pivot points with having the same signifigance as those horizontal line we place on the charts ourselves. But pivot points are not meant to be interpreted by their literal price value but rather as a region of price action to expect to see S/R happen. They are not determined from actual swing points like what your horizontal lines represent, but rather they are a mathematical formula of highs and lows for a given time period. Any time you have a S/R level sync up with a pivot point level though, you can bet it's a good trade set up.


Three basic steps and your support and resistance is at the best levels.


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