Resistance by Arthur A. Merrill, C.M.T.
Prices, like everything else move along the line of least resistance. They will do whatever comes easiest therefore they will go up if there is less resistance to an advance than to a decline and vice versa.
—Edwin Lefèvre, in Reminiscences of a Stock Operator
If the market has low resistance to advances and strong resistance to declines, prices move up rapidly. When resistance to the advance builds up, prices slow down and finally reverse when the resistance to advance exceeds the resistance to decline. If the market then exhibits low resistance to the decline, prices fall rapidly.
In other words, the direction of prices and the speed of advance or decline are determined by the difference between the resistances. Resistance can be measured by the volume of trading required to move prices one point. It's the number of shares traded per point change.
To measure the difference between resistance to advances and declines, I developed an index some years ago that subtracts the resistance to advances from the resistance to declines, so that high figures are
bullish and low figures are bearish. With a computer, I looked at each of the hours in the week and subtracted the shares per point in the rising hours from the shares per point in the declining hours.