Support & Resistance Axioms by David G. Ondercin, Phd
Here are seven axioms for the practical application of support
and resistance levels to your trading.
Support and resistance are of central importance to all
traders and a necessary starting point for new traders.
There are self-evident truths concerning support and
resistance of financial markets, so let us examine some of these axioms for their practical application to trading.
The concept of support and resistance is important because
traders believe it is important.
The belief is self-fulfilling. Traders are certain, for example,
that the violation of an established high means that the
security will likely go higher. Likewise, when a significant
low has been penetrated, traders believe that the market in
question will go lower. They hold these beliefs because it
happens over and over again.
Traders act on their beliefs about how the market moves.
Therefore, when they see that the market is bouncing off support,
others with the same belief will join in and buy that particular
market. That sends the market in an upward direction.