• Supports and Resistances
  • Identifying Levels
  • Standard Pivot Points
  • Usage of Pivot Points
  • Other Pivot Points

Supports and Resistances

Establishing Supports and Resistances

  • Points where supply and demand meet
  • A support level may prevent a further decline
  • A resistance level may prevent the price from rising further
  • Areas to look for potential buy and sell signals
  • Previous tops and bottoms
  • Supports are the levels below the current market price
  • Resistances are the levels above the current market price

Supports and Resistances Changing Roles

  • A broken resistance can turn into a support
  • Previous resistances represent potential support levels
  • A broken support can turn into a resistance
  • Previous supports represent potential resistance levels

Supports and Resistances – Tops and Bottoms

  • First choose a timeframe you would like to trade
  • Mark the ATH (All Time High) and the ATL (All Time Low)
  • Mark all previous tops and previous bottoms
  • Cluster of levels make the zone more significant

Supports and Resistances – Moving Averages

  • Moving averages provide support and resistance
  • Add the EMA 20 and the EMA 55
  • Mark the averages with horizontal lines

Supports and Resistances – Significance

  • Supports are levels below the market price
  • Resistances are levels above the market price
  • Cluster of levels make the zone more significant

Supports and Resistances in a Range

  • In a range, we only have two important levels
  • The top of the range
  • The bottom of the range

Pivot Points

  • Standard pivot
  • Demark pivot
  • Fibonacci pivot

Pivot Points Calculation

  • Estimated using prior high, low and close price of  a higher timeframe
  • For Intraday charts, use prior day high, low, close
  • For medium term charts, use prior week high, low, close
  • For long term charts, use prior month high, low, close

Standard Pivot Points 

  • Resistance 2 (R2)     =     P + (High – Low)
  • Resistance 1 (R1)    =     (P x 2) – Low
  • Support 1 (S1)     =     (P x 2) – High
  • Support 2 (S2)     =     P – (High – Low)

Other Pivot Points

  • Fibonacci and Demark Pivot Points
  • Fibonacci main pivot is derived in the same way as the standard pivot point
  • Supports and resistances are calculated using Fibonacci ratios 0.382 and 0.618
  • Demark Points have a different base and are conditional on the relationship between the close and the open