Home Page Product Download

More Ment
Save $100 On eSignal
Visit Vista-Research for EZL programming/resources

Our Friends
Save $100 On eSignal
Visit Vista-Research for EZL programming/resources
Visit Stocks & Commodities Online
Visit Futures Magazine Online
Visit MSO Data for historical data Deals







Support & Resistance

Finding Support & Resistance

Support and resistance levels can be identified by many means. Japanese candlestick can aid in identifying support and resistance levels as well as other techniques such as Fractal formations, market tops and bottoms, and trend channels. As we discuss the image above, well touch on a few of the techniques and how to use them.

The easiest way to understand support and resistance is to think of a skyscraper. As one jumps into the elevator and goes to different levels, each level has a unique floor and ceiling. Support should be thought of as a market floor. Resistance should be thought as a market ceiling.

As the market price moves below a support level (through the floor), the support level then changes to a resistance level (the new ceiling for the market price). Inversely, as the market price moves above a resistance level (through the ceiling), the resistance level then becomes a support level (the new floor for the market price).

Within most charts, investors will be able to identify many different levels of support and resistance. Because of this, investors should concentrate their efforts on support and resistance levels that are most relevant to the immediate market price activity. Sometimes these immediate support and resistance levels can be carries back to previous support and resistance levels that have formed. The market is unique in this manner that once a support or resistance level has formed, it will usually maintain that level in the future as the market price continues to fluctuate.

A. The high at this level is obviously a resistance level because the market was not able to continue to bullish rally. This type of resistance is fairly easy to find on a chart. Any major market reversal will typically be a support or resistance level.

B. The resistance level created by the Three River Evening Star pattern formation is near the high of the white star candle. This type of pattern formation is a potential top formation which is why investors should pay close attention to the resistance level that has formed here.

C. This support level is created by an extended Tweezers Bottoms pattern formation between the two candles with equal lows. This type of candlestick formation clearly identifies market support at the lows of the two candles. When the market attempts to test a price level twice (sometimes more) and cant break that price level, investors should consider this a defined market support level.

D. At this level another Tweezers pattern forms to identify a new resistance level. Notice though that the previous resistance levels at B had been broken with the market rally. The tweezers tops pattern that formed at D is again a clear indication the market has reached a new ceiling.

E. Only a few trading sessions after D, the market fell back to a previous resistance level (B) that carried forward to create a support level at E. This is an excellent example of how a resistance level (a ceiling) will become a support level (a floor) as the market moves above the ceiling.

F. The support level found here is an intermediate support level because the market fell after a bullish rally, then began to rally again. The interesting thing about this support level is that one could carry it back to the Doji (between A and B). Sometimes the open and close levels of Dojis are actually a support or resistance level. Dojis are unique candles because the represent indecision in the market which is sometimes caused by support or resistance.

G. The resistance level found at this point is caused by the intermediate market reversal. This type of market reversal is indicative of a market resistance level because the market price immediately reversed after attempting to rally. One could also attempt to carry this resistance level back to the first top on this chart at A.


  Matheny Enterprises Site Directory


End Of Day
Real-Time Analysis
AutoTrading Robots
eSignal Modules
TradeStation Modules

Custom Programming
  Stand-Alone Applications
Target the markets for profits like I do.
Join TradeTank.com

Web Sites
Message Board

MENT Trader Services
MENT Enablement



Are you ready to really trade the markets like a pro?

Are you ready to trade once or twice a day?

Are you ready for consistently designed profits in your account?

Are you ready for the most universal trading system ever designed?

Then you need the ATWS Trading System.


I wanted it pretty much as soon as I had a look at it...it does not take long to realize its a money maker, G. McArthur, UK.

This looks great! A.G, Switzerland.


Comments/suggestions : BMatheny@Ment.Com
Disclaimer, there is a risk of loss in trading.
Copyright 1997-2012 Matheny Enterprises Corporation


traders, investors, day traders, money managers, hedge fund managers, brokerages, real-time streaming data, delayed data, end-of-day data, streaming real-time European stock market data, foreign exchange trader, forex investment, forex desktop stock ticker, equities, financial analysis tool, data, find stock quote, financial portfolio, forex trade, futures chart, good stock to buy, incentive stock option, individual investor, hot stock, money portfolio manager, nasdaq after hours, online forex, online futures options, online stock, quotes, quote charts, charting, position trader, scanner, market scanner, best stocks, spot rate, shares, shareholders, swing trading, trading analysis, trading education, wall street, the nasdaq stock market, what stock should i buy, bear market, bull market, market, trade option, technical stock analysis, technical analysis training, investing tutorial, how to use esignal, trading 101, education in trading, Nasdaq, nasdaq level ii, news, options, portfolio, price, quote, quotes, real time, real-time, real-time market data, screaming , stocks, streaming, streaming, ticker, historical data, real-time stocks, real-time equities, real-time futures, real-time financial data, real-time data, financial data, equities, portfolio manager, investing, investor, delayed data, delayed stocks, data delivery, data sources, time & sales, market maker activity ticker, option chains, market leaders, individual investor, institutional data, business solutions, active trader, charting package, technical analysis, analysis tools, market strategies, day trader, end-of-day data, summary quote window, option analytics, regionals, listed regionals, OTC, optimized bulletin board, ADX analysis, DMI analysis, ADX/DMI, quotes, real-time quotes, financial news, dow jones news, stock quotes, options, stock screeners, market screeners, Bollinger Bands, Stochastics, MACD, Forex, Foreign Exchange, crossrate, spot rate, treasuries, position trader, swing trader, quotes, real-time quotes, financial news, Dow Jones News, stock quotes, Nasdaq Level II, options, stock screeners, market screeners. Bollinger Band, Stochastics, MACD, Forex, Foreign Exchange, crossrate, spot rate, treasuries, position trader, swing trader, guotes, real-time quotes, financial news, Dow Jones news, stock quotes, Nasdaq Level II, options, stock screeners, market screeners,real-time data, data, market data, market movers,AdvancedGet, Alerts, charts, Data, DataFeed, Equities, Esignal,eSignal Market Scanners, eSignal Market Scanner,eSignal Pro, eSignal TurboFeed, financial, free, fundamentals, futures, futures, intraday, intraday charts, market, money Japanese Candlestick, Japanese Candlesticks, Candlestick, PFP, Pattern Forecaster Plus, Invest, Patterns, Matheny, Forecaster, Fractal, Analysis, Candle, Doji, Hammer, Stock, Futures, Commodities, Mutual Funds, Options, Magazine, Brad Matheny, Technical Analysis


Checkout View Cart Contact