Determining Support and Resistance Using Recent Price Motion

In this technique Support is determined as a price level at which market seems to having difficulty to go lower. In the contrary, Resistance is a price level at which market seems to having difficulty to go higher.

The difficulty to break certain level is indicated by several unsuccessful trials to go lower or higher than that level. Agressive trader probably use only 2 unsuccessful trials, while conservative traders use 3 or more unsuccessful before they notice a support or resistance level. Many traders believe that the more often price tests a level of support or resistance without breaking it, the stronger the area of resistance or support is.

If a level of support is broken, it usually become the next resistance. In the contrary, if a level of resistance is broken, it usually become the next support