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Casual Articles - Forex Secrets - Support and Resistance Levels in Forex Market
Getting More Focused -- It’s All About YouJeanna Pool from Catalyst Creative writes a great ezine on marketing each month. In January she shared 5 Great Marketing Tips for 2006. Number 1 was “Stop Focusing on You”. She declares 2006 the year of the client and exhorts you to focus totally on your clients and their needs. I think she’s right on. And I think she’s completely wrong. Why right and wrong?Because if you’ve been in business for awhile and have great products and great services and aren’t getting the results you want, you may be too focused on your clients and not focused enough on yourself. Last week, I encouraged your to revisit your vision of your business and ask yourself why you started your business in the first place. Now I want you to focus even more on what you want. What exactly do you want out of your business? Do you want more money? If so, how much? Write down a number. Do you want more flexible hours? If so, write out exactly the schedule you’d like. Do you want to change the world? If so, write out specifically how that would look.Why all this focus on you? Because if you aren’t absolutely clear on what you want, how are you going to know if you are successful? How are you going help your clients if you aren’t taking care of yourself as well. Maybe you need to be making $150,000 a year to provide your family with the life that you wanted. You want to send your kids to college. You want to retire while you are still in active and in good health. Or maybe you want to just make an extra $20,000 a year working part-time while you take care of your children until they are in school. Or perhaps your goal is to make a million dollars a year and live a really incredible life. Defining this is very important. Why?Because what you want will shape your business. It will determine who your customers are and how you will help them. If you want $5,000,000 in sales, your products and methods are going to be a whole lot different than if you want $50,000 in sales. If you want to work only afternoons, that is going to shape your business as well. If you want to sell your business and retire in five years, that’s going to affect your decisions as well. So right now, get out a paper and pen and get ready to write.Did you get your pen and paper out? Answer the question, “What do I want out of my business?” Write in as much detail exactly what you want your business to give you. Be as specific as possible. Write as much as you can. Think income, lifestyle, schedule, partners, travel, location, employees. What exactly do you want? Throughout the week, add to this and revise it. Compare where you are right now to what you really want. How large is the gap
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance ar
A domain name can be considered as the name of a website. Actually the web addresses are numeric in nature and not all of the people can remember those addresses easily. To cater to this problem people have created domain names. These names also appear with the URL. The name of a website is very important. You can make your web site a search engine favorite if you choose the right kind of domain name for your web site. If the domain name which you have chosen is not appropriate, it will not be able to generate results for you. Making your domain name appropriate can be a very simple process or it may happen to be a very complicated one for you.Those domain names are better which remove the difficulty of remembering the IP addresses. As these names are memorable, it becomes easier for a person to recall it and thus the chances of him or her revisiting your website increase. Thus the first step you can take to excell at domain names is to choose a name which is memorable. The domain name will be more effective if it is related to the topic or the kind of business your website is dealing. For example, if your web site is about horoscopes and your name is not at all related to it, people will not be able to visit your website frequently. Choose more conventional domain names. These steps will help you in choosing the most appropriate domain name for your web site.
1. a current Forex rate (CFR) is surrounded by levels of:
a). resistance being superior to CFR;
b). support being inferior to CFR.
2. a level breakthrough triggers a leap to a consecutive support/resistance;
3. a false breakthrough is responsible for a rate backstroke (say, from resistance to support).
Thus, having data on resistance and support levels and being armed with R/S true/false criteria, a trader grows faultless-entry skilled to ensure smooth level-to-level trading.
To be found below is a graphic drawing of a flat followed by an R/S up/down breakthrough.
The chart 1. (For view picture see notes in end of article)
In actual sample GBPUSD trade dated January, 31, 2006 the support breakthrough has triggered a bullish in-session trend.
Simple, isn’t it? Affirmative at a glance, but 95% of traders loosing their forex deposits are calling for natural questions:
1. What’s the reason, the world traders are getting entangled in so a seemingly simple regularity?
2. What’s the way of correct detection of R/S levels for currencies to use to jet off from?
3. What attributes are inherent to true/false breach differentiation?
It is, thus, to be concluded that a trader will never achieve steady FX gains unless the answer is found to the above three simple questions.
CLASSICAL BOOKS ON RESISTANCE AND SUPPORT LEVELS
Forex scholars’ books, when analyzed, are giving grounds why 95% of traders turn deposit-killers. The point is that under different technical scholars:
a). fairly different understanding is being attached to support and resistance;
b). no distinct criteria (except Demark’s technique) is in service to finding a support and a resistance;
c). there is no clear-cut interfacing between R/S levels on different timeframes.
Below is sort of understanding classification:
1. A. Elder. R/S are understood by SOME SCHOLARS to be horizontal lines drawn along price highs and lows
support and resistance are horizontal (or almost horizontal) lines linking several minimums (maximums).
The chart 2. Support and resistance (For view picture see notes in end of article)
b). J. MURPHY also indicates that “points 2 and 4 represent uptrend support levels. The figure depicts uprising support and resistance under an uptrend with points 2 and 4 being support levels which use to be coincident with earlier lows. Points 1 and 3 indicate resistance levels, which use to be coincident with earlier highs” (see: “Technical analysis of the Futures Markets”
Fig. 3a and 3b. Uptrend and downtrend support-resistance levels (For view picture see notes in end of article)
2. SOME SCHOLARS believe support-resistance to be sloped lines drawn along price highs and lows (trend lines, actually) as below:
Fig. 4. Trend line-fashion support-resistance pattern (For view picture see notes in end of article)
a). T. DEMARK
Fig. 5. Bid pivot points (TD-points) building up a resistance level (For view picture see notes in end of article)
The TD-points are peculiar of price values being not exceeded within 2 adjacent days. The points are specially emphasized on the chart.
Note that the price movement above the TD-line is mirrored by same after the down break of this line.
Price projection Z is made by way of the following calculation:
- difference is taken between Y being maximum price above the TD-line and X being special price immediately below the TD-line;
- the obtained value is subtracted from A-B line breakthrough price.
b). L. BORCELINO is also a user of inclined lines as support/resistance (view:
Fig. 6. Quoting L. Borcelino: “As evident form these examples, trendlines, drawn across preceding highs and lows, constitute perspective support and resistance projection”. (For view picture see notes in end of article)
3. E. NAYMAN’S combined commitment of inclined and horizontal R/S levels (view: “Trader’s Minor EncyclopediaJ
“A resistance line connects market important maximums (highs, peaks)”, And further on: “R/S lines drawing should be preferably done through price concentration areas, rather than through highs/lows extremes” (???).
Per minimum price trend line (a support):
Fig. 7 (For view picture see notes in end of article)
Example of E. Nayman using resistance/support levels at trade station:
Fig. 8 (For view picture see notes in end of article)
4. MOVING AVERAGES based resistance/support levels.
a). E. NAYMAN: ”Bollinger Bands are sort of peculiar support/resistance lines
Fig. 9 (For view picture see notes in end of article)
5. ROUND NUMBERS being support/resistance levels
a). E. LEFEVRE (view: “Memories of an Exchange Profiteer” underlined: “Rates, having, for the first time, traveled 100, 200 or 300 points, are almost sure to cover additional 30 to 50 pips”
b). D. SCHWAGGER: “One is to be especially cautious about dollar holdups. With USD 781,25 best working on T-bonds and USD425 – on soybeans, temptation is raising to find “optimum” holdup for each market. It is advantageous to establish a round number to comfortably use it all of the markets.
CLASSIFICATION OF WEAK AND STRONG R/S LEVELS AS VIEWED BY FOREX SCHOLARS
J. MURPHY classifies support and resistance (view “Technical Analysis of Futures Markets”, New York Institute of Finance ? Prentice Hall, 1986) proceeding from: price in-domain residence period (1); volume of trade (2) and price domain age (3).
1. The longer the price reciprocation period within a certain support/resistance area, the more critical the area. By way of an example, if a certain stagnation area observed a 3-week price up/down movement with subsequent rally thereof, this support domain is more important than that having observed a 3-day price reciprocation.
2. Volume of trade is another means to evaluate importance of support/resistance. If, say, a support formation did involve a huge volume of trade, it means a huge number of contracts passing from hands to hands, hence the support levels is ranking high and visa versa: the less the volume of trade, the lower-ranking the support.
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance are
At the beginning of the web era, users would go to directories to find sites relevant to their interests. In fact, Yahoo!, the web's number one destination, started as a directory. Nowadays, most users rely on search engines, not directories, to find what they're looking for.When search engines started to become popular, they relied on web pages' 'keyword metatags' to determine the topic and relevance of the page (the keyword metatag is a section within a web page's HTML code where webmasters can insert words that are relevant to the page's content). Webmasters discovered that by stuffing their meta tags with popular search terms repeated hundreds of times, they could propel their pages to the top of the search results.Search engines caught up to the abuse and decided to ignore the meta tags and rely instead on web page copy. Webmasters then started to overstuff their page copy with popular search terms, often writing them in the same color as the web page's background, so that they could be detected by search engines while being invisible to users.Again, search engines discovered the trick and decided that the best way to rank a web page's content and its topical relevance was to rely on inbound links from other pages. The rationale behind this is that it is much more difficult to influence other people to link to you than it is to manipulate your own web page elements. In fact, inbound links are the foundation of Google's Pagerank™ algorithm.There are several ways to get inbound links, among them writing articles that include your bylines with a link to your page, exchanging links, and listing your site in directories.Listing your sites in good directories is probably the best way to get quality links that are highly valued by the search engines. Since directories rely on human editors who enforce strict criteria to list a site, and since directories organize the information in highly focused categories, they are an invaluable resource for search engines to measure the quality and the relevance of a web page.In summary, directories are important not because they generate significant traffic (they don't), but because they are given great importance by the search engines to qualify and rank web pages, and to determine their topical relevance.You should definitely list your site with quality directories if you want to increase your chances of success with the search engines.
a). fairly different understanding is being attached to support and resistance;
b). no distinct criteria (except Demark’s technique) is in service to finding a support and a resistance;
c). there is no clear-cut interfacing between R/S levels on different timeframes.
Below is sort of understanding classification:
1. A. Elder. R/S are understood by SOME SCHOLARS to be horizontal lines drawn along price highs and lows
support and resistance are horizontal (or almost horizontal) lines linking several minimums (maximums).
The chart 2. Support and resistance (For view picture see notes in end of article)
b). J. MURPHY also indicates that “points 2 and 4 represent uptrend support levels. The figure depicts uprising support and resistance under an uptrend with points 2 and 4 being support levels which use to be coincident with earlier lows. Points 1 and 3 indicate resistance levels, which use to be coincident with earlier highs” (see: “Technical analysis of the Futures Markets”
Fig. 3a and 3b. Uptrend and downtrend support-resistance levels (For view picture see notes in end of article)
2. SOME SCHOLARS believe support-resistance to be sloped lines drawn along price highs and lows (trend lines, actually) as below:
Fig. 4. Trend line-fashion support-resistance pattern (For view picture see notes in end of article)
a). T. DEMARK
Fig. 5. Bid pivot points (TD-points) building up a resistance level (For view picture see notes in end of article)
The TD-points are peculiar of price values being not exceeded within 2 adjacent days. The points are specially emphasized on the chart.
Note that the price movement above the TD-line is mirrored by same after the down break of this line.
Price projection Z is made by way of the following calculation:
- difference is taken between Y being maximum price above the TD-line and X being special price immediately below the TD-line;
- the obtained value is subtracted from A-B line breakthrough price.
b). L. BORCELINO is also a user of inclined lines as support/resistance (view:
Fig. 6. Quoting L. Borcelino: “As evident form these examples, trendlines, drawn across preceding highs and lows, constitute perspective support and resistance projection”. (For view picture see notes in end of article)
3. E. NAYMAN’S combined commitment of inclined and horizontal R/S levels (view: “Trader’s Minor EncyclopediaJ
“A resistance line connects market important maximums (highs, peaks)”, And further on: “R/S lines drawing should be preferably done through price concentration areas, rather than through highs/lows extremes” (???).
Per minimum price trend line (a support):
Fig. 7 (For view picture see notes in end of article)
Example of E. Nayman using resistance/support levels at trade station:
Fig. 8 (For view picture see notes in end of article)
4. MOVING AVERAGES based resistance/support levels.
a). E. NAYMAN: ”Bollinger Bands are sort of peculiar support/resistance lines
Fig. 9 (For view picture see notes in end of article)
5. ROUND NUMBERS being support/resistance levels
a). E. LEFEVRE (view: “Memories of an Exchange Profiteer” underlined: “Rates, having, for the first time, traveled 100, 200 or 300 points, are almost sure to cover additional 30 to 50 pips”
b). D. SCHWAGGER: “One is to be especially cautious about dollar holdups. With USD 781,25 best working on T-bonds and USD425 – on soybeans, temptation is raising to find “optimum” holdup for each market. It is advantageous to establish a round number to comfortably use it all of the markets.
CLASSIFICATION OF WEAK AND STRONG R/S LEVELS AS VIEWED BY FOREX SCHOLARS
J. MURPHY classifies support and resistance (view “Technical Analysis of Futures Markets”, New York Institute of Finance ? Prentice Hall, 1986) proceeding from: price in-domain residence period (1); volume of trade (2) and price domain age (3).
1. The longer the price reciprocation period within a certain support/resistance area, the more critical the area. By way of an example, if a certain stagnation area observed a 3-week price up/down movement with subsequent rally thereof, this support domain is more important than that having observed a 3-day price reciprocation.
2. Volume of trade is another means to evaluate importance of support/resistance. If, say, a support formation did involve a huge volume of trade, it means a huge number of contracts passing from hands to hands, hence the support levels is ranking high and visa versa: the less the volume of trade, the lower-ranking the support.
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance ar
Clear concise email marketing, written directly and to the point, following proper etiquette will raise your reputation and help build your business.The first thing to consider with any email marketing campaign is not to offend anybody. Insult a potential customer with your message and they are sure to delete your message. Don't let this happen to you!Email etiquette is very important, and a message that is not only well written, but written correctly earns respect and keeps your readers interested in the topic.Here are some important guidelines to follow when writing emails to gain trust, earn respect and keep your readers interested and wanting more.Always wrap your lines at 65 characters or lessWhen your readers are looking at the computer screen for extended periods of time their eyes may become fatigued. Causing them discomfort and possibly loosing interest in what they are reading. The short span of characters reduces eye fatigue and also helps to maintain their attention.Some email clients will enforce line wrapping of received messages to around 65 characters. If not properly formatted your message will arrive looking all cut up and unprofessional.You can achieve the 65-character limit by simply hitting "enter" at the end of the limit. When using Word as you email editor in Outlook, you can set the right indent to around 5 inches. If you are using Outlook Express you can set the line wrap to any character width you choose.Never use all capital lettersOn the Internet and in email messages, using all capital letters is considered yelling. It's okay to write some sentences and some words in all caps to stress a point, but don't over do it.People buy from someone they trust. Emails in all capital letters are perceived as being written by someone uneducated, and have an appearance that damages the credibility of an offer and whomever presents it.Always, always check your spelling and grammarI am sure you would you be influenced by an email selling you something that had noticeable spelling and grammar mistakes. I am also sure you would be influenced in a negative way.Your target audience will judge you and your product offer by the quality of your presentation, in this case that is your email message. Remember you need to make a good first impression. If that first impression is full of typos and bad grammar you will lose your creditability and most likely a sale.When you're in business for yourself, your image is your reputation. That reputation is the reason people buy from you.It's essential that you create an honest creditable image
The TD-points are peculiar of price values being not exceeded within 2 adjacent days. The points are specially emphasized on the chart.
Note that the price movement above the TD-line is mirrored by same after the down break of this line.
Price projection Z is made by way of the following calculation:
- difference is taken between Y being maximum price above the TD-line and X being special price immediately below the TD-line;
- the obtained value is subtracted from A-B line breakthrough price.
b). L. BORCELINO is also a user of inclined lines as support/resistance (view:
Fig. 6. Quoting L. Borcelino: “As evident form these examples, trendlines, drawn across preceding highs and lows, constitute perspective support and resistance projection”. (For view picture see notes in end of article)
3. E. NAYMAN’S combined commitment of inclined and horizontal R/S levels (view: “Trader’s Minor EncyclopediaJ
“A resistance line connects market important maximums (highs, peaks)”, And further on: “R/S lines drawing should be preferably done through price concentration areas, rather than through highs/lows extremes” (???).
Per minimum price trend line (a support):
Fig. 7 (For view picture see notes in end of article)
Example of E. Nayman using resistance/support levels at trade station:
Fig. 8 (For view picture see notes in end of article)
4. MOVING AVERAGES based resistance/support levels.
a). E. NAYMAN: ”Bollinger Bands are sort of peculiar support/resistance lines
Fig. 9 (For view picture see notes in end of article)
5. ROUND NUMBERS being support/resistance levels
a). E. LEFEVRE (view: “Memories of an Exchange Profiteer” underlined: “Rates, having, for the first time, traveled 100, 200 or 300 points, are almost sure to cover additional 30 to 50 pips”
b). D. SCHWAGGER: “One is to be especially cautious about dollar holdups. With USD 781,25 best working on T-bonds and USD425 – on soybeans, temptation is raising to find “optimum” holdup for each market. It is advantageous to establish a round number to comfortably use it all of the markets.
CLASSIFICATION OF WEAK AND STRONG R/S LEVELS AS VIEWED BY FOREX SCHOLARS
J. MURPHY classifies support and resistance (view “Technical Analysis of Futures Markets”, New York Institute of Finance ? Prentice Hall, 1986) proceeding from: price in-domain residence period (1); volume of trade (2) and price domain age (3).
1. The longer the price reciprocation period within a certain support/resistance area, the more critical the area. By way of an example, if a certain stagnation area observed a 3-week price up/down movement with subsequent rally thereof, this support domain is more important than that having observed a 3-day price reciprocation.
2. Volume of trade is another means to evaluate importance of support/resistance. If, say, a support formation did involve a huge volume of trade, it means a huge number of contracts passing from hands to hands, hence the support levels is ranking high and visa versa: the less the volume of trade, the lower-ranking the support.
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance ar
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a). E. NAYMAN: ”Bollinger Bands are sort of peculiar support/resistance lines
Fig. 9 (For view picture see notes in end of article)
5. ROUND NUMBERS being support/resistance levels
a). E. LEFEVRE (view: “Memories of an Exchange Profiteer” underlined: “Rates, having, for the first time, traveled 100, 200 or 300 points, are almost sure to cover additional 30 to 50 pips”
b). D. SCHWAGGER: “One is to be especially cautious about dollar holdups. With USD 781,25 best working on T-bonds and USD425 – on soybeans, temptation is raising to find “optimum” holdup for each market. It is advantageous to establish a round number to comfortably use it all of the markets.
CLASSIFICATION OF WEAK AND STRONG R/S LEVELS AS VIEWED BY FOREX SCHOLARS
J. MURPHY classifies support and resistance (view “Technical Analysis of Futures Markets”, New York Institute of Finance ? Prentice Hall, 1986) proceeding from: price in-domain residence period (1); volume of trade (2) and price domain age (3).
1. The longer the price reciprocation period within a certain support/resistance area, the more critical the area. By way of an example, if a certain stagnation area observed a 3-week price up/down movement with subsequent rally thereof, this support domain is more important than that having observed a 3-day price reciprocation.
2. Volume of trade is another means to evaluate importance of support/resistance. If, say, a support formation did involve a huge volume of trade, it means a huge number of contracts passing from hands to hands, hence the support levels is ranking high and visa versa: the less the volume of trade, the lower-ranking the support.
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance ar
Let's face it a majority of people sit at their desks and wonder to themselves there has got to be better way of making money. Some people sit and brain storm for ideas, some want their own home based business, some want to be their own boss, every one of these people have what is called the inner entrepreneur. However there are many obstacles that entrepreneurs face.The problem is finding the right niche, financing the idea and implementing it for the masses to see. You can sell info products, tangible items like PC's, for some even sell sex like the billion dollar adult industry, there's gambling sites. Another aspect is finding the tools to collect your money. Online transcaction processors like paypal are a perfect example. But for it to work online you need an internet presence for prospective customers to flock to. Yes that's right flock to! What I mean is you could have the best idea or product but without traffic let's face it you have inherited an out of control hobby. Traffic is what makes sales.Some have wasted thousands on funding their "baby" and still are not seeing any profit. You must do the research and find what works. Realistically no matter what venture you pursue nothing is free, some money some where will have to exchange hands. The bottom line is, that money that is exchanging hands is going into some entrepreneur’s pocket! That's how I have made some money from my businesses. It takes time and patience.
3. Still another support/resistance importance indicator is its age in relation to the present moment. Since we are dealing with traders’ reaction to market moves and to positions they have entered or have failed to enter, it is fairly clear, that the younger the event and the reaction thereto, the more important the event.
Seven years later (in 1993), A. ELDER has confirmed 2 of 3 J. Murphy’s postulates dated back to 1986. His classification of resistance/support levels is guided by:
- number of test tangencies it sustained (the greater the number – the stronger the level). Within a fortnight an immediate support/resistance is formed; within 2 months the level grows accustomed to by traders, thus attaining medium power; within 2 years actually a stereotype is built radiating strong support and resistance.
- price scatter dominating a support/resistance level (the wider the range thereof – the stronger the level). A wide-range turning-point price consolidation is similar to a high fence surrounding valuable property. A congestion zone equal to 1 % of current price (4 points with S&P500 at 400 level) yields insignificant support/resistance, whereas a 3% area is responsible for medium levels with a 7% area possessing sufficient power to be a strong trend killer.
- The greater the volume of trade in a support/resistance area, the stronger the levels. Huge volume within a congestion zone is indicative of numerous emotional jobbers’ involvement. As opposite, minor volumes point out traders’ indifference towards the level being intersected, hence being attribute of the level’s deteriorated health.
Weak support/resistance levels are capable of bringing a trend to a halt, while strong ones may appear trend reversers. Traders buy support and sell resistance, thus turning their impact into a self-justifying projection.
SCHOLARS’ VIEW ON SUPPORT/RESISTANCE SEATING POINTS
1. T. DEMARK recommends:
- plotting resistance upon bid TD-points
- plotting support upon ask TD-points.
2. D. SCHWAGER (view: “Technical Analysis. Complete Course”) insists on drawing resistance and support “in the vicinity” of prior lows and highs.
“Support and resistance are to be viewed as approximate areas rather, than exact levels. It is to be emphasized that any previous high is not at all a premonition of perspective prices dry up thereat or there under. Instead, it is indicative of a resistance to be expected near that level. By analogy, a previous low is not at all illustrative of further price declines halting thereat or there above. Instead, it is indicative of a support to be projected close to that level.
Depicted below is a support zone governed by relative prior highs and lows concentration: gold, futures.
Fig. 10. (For view picture see notes in end of article)
Continued by D. Schwager: “Some technical analysts use to treat previous highs and lows as being endowed with, sort of, holy significance. A previous high, being 1078, is deemed by them a strong resistance. In case the market displays a spike higher, say, as far as 1085, they reason the resistance to have been breached. It’s not correct. Support and resistance are but to be looked upon as cloud-shaped areas rather than exact levels.”
3. J. MURPHY resorts to plotting support and resistance in a local peak-wise fashion (i.e. by local highs and lows): “A resistance level usually coincides with the previous peak level”.
Fig. 11. (For view picture see notes in end of article)
Fig. 12. (For view picture see notes in end of article)
4. A. ELDER: “Resistance and support are to be preferably plotted (see Fig. 13) through congestion zone margins (CZM) rather than through highs and lows. CZMs constitute traders’ mind-changing areas, whereas highs and lows are only reflective of panic among weakest jobbers”.
Fig.13. (For view picture see notes in end of article)
Continued by A. Elder: “Beware of support/resistance false breaching, indicated as “F” in the above figure. Breaches are followed by amateurs, with professionals being opposite travel jobbers. Now, pay some attention to the chart’s right corner, where prices have bumped into strong resistance. It’s high time to hunt for shorting with a stop-loss to be placed slightly above the resistance level”.
To be noted is a pronounced regularity, not referred to by A. Elder: the support/resistance levels drawn through previous local peaks are not extended by him after false breaching thereof.
4. D. SCHWAGER gives the following explanation when resorting to projection of 2 (!) inclined support and resistance levels:
- “Standard lines are usually drawn through price extrema (highs, lows), attributable to traders’ emotions, therefore these points may not reflect the market’s real trend”.
- “An inner trendline is to be plotted closest to the bulk of relative lows and relative highs, ignoring extreme points”
D. Schwager himself is the recognizer of the subjective nature inner trendline method, but in so doing he jumps to a very important conclusion that ordinary trend lines are:
- similarly subjective (!);
- far less helpful (!), than inner trendlines.
“One of inner trendlines’ shortcomings is their inevitably random nature, even greater than that possessed by ordinary trendlines, being restricted by extreme highs and lows, at least”.
“In practice, not infrequently, several options prove available as regards inner trend line plotting procedure (see Fig. 14). Nevertheless, my experience advises inner trend lines to be of greater avail than ordinary trend lines when spotting potential support/resistance areas”.
BRIEF CONCLUSIONS:
1. Each forex scholar offers his own interpretation of support/resistance levels, meaning different entities thereby (inclined, horizontal, inclined-horizontal, MA-based, round numbers-based, etc.).
2. There exists no clear-cut technique to define points to plot support/resistance levels through (except that of Demark’s).
3. In real time trading, that said, these levels discovery on Forex charts automatically entails absolutely different conclusions.
Fig. 14. (For view picture see notes in end of article)
TESTING AND PRACTICAL INCONSISTENCY OF CLASSICAL SUPPORT/RESISTANCE DETECTION METHODS
Jeffry Owen Katz and Donna L. McCormick have disclosed results of their testing of the above scholars’ recommendation procedures in their “Encyclopedia of Trading Strategies”:
TEST PROCEDURE 2
A channel breakthrough-operated system. Closing prices are utilized only; next day market price entry at session opening; commission and slippage being accounted for.
The above test has been performed exactly the way the previous one, but with no account to slippage (3 ticks) and commission (USD15 per dealing cycle). Although the model displayed perfect operation with no account to dealing expenditures, it has turned out a complete fiasco in practice.
Even the best-in-sample solution has proved loss-responsible only, and, as expected, the system’s beyond-sampling poor operation came into being.
Note: In compliance with E. Nayman’s theoretical outlook, a channel upward breach is alleged to be a STRONG (!!!) trading signal at an uptrend.
TEST PROCEDURE 6
It is a closing price breakthrough system with next day per stop-order entry. The model longs via a stop-order at the point of breaching a resistance appointed
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