Wednesday, July 14, 2010
7/14/2010 Resistance Becomes Support
Good Afternoon Traders,
I wanted to make a post on how I find support and resistance levels in the market. The chart above is a 15 minutes candle chart with a MACD and Stochastic. I draw horizontal lines at gaps and at significant highs and lows. I leave the lines on the chart until they are no longer relevant. Its almost scary how often the market pulls right back or runs right into a previously drawn support or resistance line.
Resistance becomes support on the way up and on the way down, it's the other way around. The market is clearly in an uptrend now and as the saying goes "the trend is your friend". Longs are the trades I wanted going into today. Shorts for scalps only.
Today I was looking for a long around the gap test at 1084. Futures tested this line twice and both times rallied off the support. Its 3pm as I am typing this and I wouldn't be surprised to see us go parabolic into the close! Lets see how it goes. I'll update later with the 1200 tick chart to show you how my system spotted the entries.