Cueing Off Support And Resistance Levels by Thom Hartle
Tracking previous highs and lows and analyzing price action can provide clear indications of trend direction.
Early in your trading career, you probably learned that you should buy at support and sell at resistance. Support is usually described as a previous point at which the market stopped going down, and resistance as the most recenthigh point at which the market stopped going up. A more definitive approach states that resistance is the previous week’s high and support is the previous week’s low. If you use trading signals for entry and exit points based on a shorter time scale, such as signals off the daily or intraday indicators
in conjunction with weekly highs and lows, then you would be using a multiple time frame approach, as popularized by trader Robert Krausz.
And if you are trading intraday strategies, then view the
daily highs and lows as the key support and resistance points. Drawing conclusions about the state of the market and price action based on support and resistance levels is a classic charting technique. In this article I’ll look at weekly levels applied to a daily chart of the Standard & Poor’s 500 futures contract to illustrate the value of this concept.