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When it comes to support and resistance, the market can react in a lot of different ways …

As you go through technical analysis training, here are some patterns that we can often observe when that happens in the market .

One that we may refer to as touch and away as if the market continues to reach for a support resistance level , and then when it gets in that vicinity , it turns and retreats, like there suddenly was released some built up pressure . This is an exhaust . This is a formation where there is holding of the resistance level. This is a pattern that seems it is trying to break on through , by chewing the level of resistance or support like a dog knawing on a bone , but it doesn’t work out, it does no break on through, and instead the market turns suddenly and goes in the direction opposite.

The second major way that support/resistance gives way is when prices jump through the anticipated level of resistance and continue on higher . The gap, known as a “pop” can happen suddenly and can take a trader by surprise . With today’s markets that are 24 -hour and the trading platforms that are electronic there are fewer gaps like this that occur because there is continous overnight trade and there is not a long time without trading . Yet we do see gaps occur , and we need to know how to trade them . The thing to keep in mind in your technical analysis training is that when broken , support becomes resistance and resistance becomes support . Generally we will see the new price level test the previous support/resistance and will then go on towards the pop .

Another breakdown of support and resistance that occurs is that the anticipated barrier is sliced through by prices as a knife cuts through soft butter, like there was no support or resistance even there …. and that’s exactly what occurs . The price slides on through. This is most often seen when support or resistance is anticipated on a time frame but there is no backup from a time frame that is higher. One example is that if resistance is seen on the daily but there is nothing yet on the weekly chart – we should stay alert.

This information is an important part of technical analysis training – when in reality, the phenomena you believe is there, really isn’t. This is a particular situation where the time period of lower technical analysis shows support, but in the real world it doesn’t exist , or if it does exist in reality it is only weak or slight and has little or no effect on the market . The trader who is astute will be alert to this situation because no higher time period tools setting up the area will be there. The great thing when this happens is that it can be seen fast and you quickly can figure out that this is a pattern that is negative and that that there is no resistance/support in that area .

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One of the most difficult concepts for beginning traders to grasp is the concept of support and resistance.   This often is because until you encounter them, they are actually invisible , and still without using multiple timeframes it can be hard to recognize what is actually happening . 

There is a lot of effort and time that go into using technical analysis training to determine where support and resistance levels are in the market .   A variety of tools have been put to use, including moving averages, trend lines, candlesticks, and retracement levels .

Some work, some do not , and more frustrating , some may not work all the time, but some of the time.   Figuring out when an indicator or tool will work is information that is worth a lot .

Because many people only use one tool, their efforts may fall short, and one timeframe is used in application, and they try using it in every circumstance .   You reap better results when various tools, optimized for a particular condition of the market , are used in a program that is organized and thought out that takes into consideration trends and congestion.  Technical analysis training will show that further progress towards accuracy will occur as you use various tools and apply them to different timeframes and the differing results are taken into consideration .

You get the best results when you put into play a comprehensive theory of action in the market that aids the trader in knowing what the market is currently doing , why it’s currently doing it , and what is likely to happen in the near-term future , and to give traders a look at what levels of support and resistance may be that as the market goes forward can be monitored .

Sound tough ?  Possibly, but various technical analysis systems have accomplished this .

The following are several definitions.

Support is something below price , and this force can push prices back up from where they fell when it is encountered . Support involves buyers that are in the market but waiting to move until price reaches a certain level , or of those short position holders that have to buy if the market begins going against them.   Those buyers that bunch up around a specific price that cause support to actually support prices.

Resistance is something above price , and this force pushes prices back down to where they were when it is encountered . This involves sellers in the market that are waiting to act until the prices go to a particular level, or those long position holders that have to sell when the market doesn’t go their way . 

Both resistance and support can be easily identified with technical analysis that is conventional using something such as the 10 period moving average. Or it can be represented using a more evolved system taught in technical analysis training , Drummond Geometry being one example.

A higher level of tool use is used in this method to provide in support and resistance areas a higher time period overlay to a daily chart, coming from the weekly and even the monthly charts. These more evolved methods provide better support for traders making decisions to sell or buy. When using this method you can project into the future areas of support or resistance, so as the market moves on the trader can be prepared .

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