SUPPORT & RESISTANCE
It is widely believed that SM respects the support and resistance areas.
Before we proceed with Support and Resistances with regards to VSA let us look at some basics about support and resistances.
The general practice followed by most of us is to draw lines from previous swing Highs and Lows (or high and low pivots). Once these lines are they are taken as Support and Resistance lines .. I repeat.LINES IMHO this is one of the basic folly we make The question we ask here is How can a single price act as a Support or Resistance Line ? It is like assuming that in case of resistances there are a huge numbers of people holding the stocks at this particular price and early waiting sell.
A more reasonable assumption would be that there are many holding the price at and around last swing high. So there would be a area or a zone of supply/Demand rather than a single price. In case if the last swing high was an Upthrust bar the whole range off the bar could become a supply rich area.
The point here is that not all swing Highs and Swing Lows offer Resistance / Support.
A swing high can be considered as a resistance only if the price reacts at that level. Till then a swing high remains a swing high. Same is the case for the Supports. Swing lows become swing lows only if the price reacts at these levels
Enclosed is charts explaining this concept..
Please feel free to express contrary views if any More on Support and Resistance Later
It is widely believed that SM respects the support and resistance areas.
Before we proceed with Support and Resistances with regards to VSA let us look at some basics about support and resistances.
The general practice followed by most of us is to draw lines from previous swing Highs and Lows (or high and low pivots). Once these lines are they are taken as Support and Resistance lines .. I repeat.LINES IMHO this is one of the basic folly we make The question we ask here is How can a single price act as a Support or Resistance Line ? It is like assuming that in case of resistances there are a huge numbers of people holding the stocks at this particular price and early waiting sell.
A more reasonable assumption would be that there are many holding the price at and around last swing high. So there would be a area or a zone of supply/Demand rather than a single price. In case if the last swing high was an Upthrust bar the whole range off the bar could become a supply rich area.
The point here is that not all swing Highs and Swing Lows offer Resistance / Support.
A swing high can be considered as a resistance only if the price reacts at that level. Till then a swing high remains a swing high. Same is the case for the Supports. Swing lows become swing lows only if the price reacts at these levels
Enclosed is charts explaining this concept..
Please feel free to express contrary views if any More on Support and Resistance Later