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In terms of
trading, Support and Resistance areas can be viewed as likely /
possible pockets of liquidity. Mathematically, they can be termed
as repellents. Support and Resistance areas often define boundaries
/ break points to the prevailing trends. If not trend boundaries,
they will represent areas that have a high probability of containing
bullish or bearish activity for a period.
When a rising
market reaches a resistance area, there is an increased chance of
the advance either pausing temporarily or reversing. However, very
often if a market clears a resistance band with bullish trends in
place there is a very good chance that the rise will continue. Vice
Versa for support, where bearish trends are in play.
Along with the
Support or resistance level we include a magnitude. Their
are 7 magnitudes that can be applied although you will normally
only see 3 being used. The top three are.
Major areas
are of longer term significance and are relevant to all traders
and investors.
Intermediate
areas are of medium term significance and can contain activity
for months. These too are relevant to all traders and investors,
regardless of their time horizons.
Minor areas
- are normally only relevant to short term traders - they can contain
a market for one to two weeks.
By maintaining
a detailed database of support and resistance areas on all stocks
in our universe and tracking the position of each stock relative
to its levels, it becomes possible to maintain focus on which areas
of the market are being actively bought or sold.
If you have
ANY problems using or understanding report information your designated
account manager will be more than happy to help you understand terminology
or discuss your individual requirements. This is all part of the
service we offer.
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