Building A Trading Strategy Using Multiple Support and Resistance Points.

The basic concept of support and resistance is like price moving in an elevator, it’s the floor below your feet and the ceiling above your head. By understanding the movement of the elevator, or the traffic moving to each floor along with the time of the day and events happening in the building you can predict with some certainty where the elevator might stop when its moving up or down. This is support and resistance. There are many ways to determine support and resistance levels or the peaks and valleys where price has reacted in the past. Indicators are a great addition when looking at support and resistance levels. This is because the indicators will act as another form of validation that the security is approaching a support or resistance level. Since support and resistance levels act in a cyclical fashion, meaning the price will bounce off of the high and lows of the range; oscillators are the best fit.

By combining support and resistance from trendlines, using pivot point support and resistance levels and volume we can now determine important price levels for an asset. You’ll begin to see support and resistance levels form. Each time the price hits the high or low level and rebounds from it, the levels grow stronger.

Barry Norman
The Director of Investors Trading Academy as well as a published author and educator. Barry brings with him over 35 years of financial market knowledge and experience. He holds an MBA in Finance and Economics from UCLA and an undergraduate degree in Economics from the University of Maryland. Barry was award the title of “Best Education in Europe” by Global Banking & Finance. Barry is also a presenter for the MoneyShow and many well-known news sources.