Support and Resistance, A way to draw a horizontal line !

Support and Resistance, A way to draw a horizontal line !


Support, S and Resistance, R
1. Definition
1.1. Support is a zone where price moves up.
1.2. Resistance is a zone where price moves down.
Support and Resistance can interchange when that zone is overcome by price
2. Support and Resistance levels
2.1. Horizontal line
2.2. Trendline
2.3. Moving averages
2.4. A Fibonancci level that you often use (Fibo 61.8)
2.5. A ratio of pattern AB=CD , or a Fibo derived from Harmonic pattern
Support and Resistance level are mostly depending on the trading skills and experiences of individuals
You and me would discuss a way to draw a horizinteal line
– S1: Change the chart to Line chart (because I prefer Closed price)

– S2: Choose zones where price is mostly reacting to that zone, then draw a horizontal line at those zones

– S3: Change back chart to candle chart of bar chart and adjust the horizontal line to make it look approriate

Just only 3 steps for us to draw a support/resistance line
o Attention:
– I emphasis that Support/Resistance is a zone, not a line. We usually based on historical data to plot the horizontal support/resistance zone. There fore, the close of candle or the shadow of it getting over that zone are quite common
– Because we base on historical data to plot it, so it doesn’t have significant value in some specific cases. Not every time that price approaches that zone and bounce back. And not all the bouncing back case meet our expectation.
– All should depend on the surrounding theme of market, we have to look careful on specific cases to consider applying the Support/Resistance zone logically.
– All market are freely traded so there is always a chance to form a brand new Support/Resistance .
Good luck for new trading week!