Common Patterns of Support and Resistance You'll Learn with Technical Analysis Training The market's reaction to support and resistance can happen in a lot of different ways ... As you take your technical analysis training, here are a few patterns that may be seen when this occurs in the market . One that may be called touch and away as if the market continues to reach for a support resistance level , and once it comes close, it turns and retreats, as if some pressure was built up and released. This is known as an exhaust. It is a formation where the resistance level holds . This is a pattern that seems it is trying to break on through , by chewing the level of resistance or support like a dog might chew a bone , but it doesn't work out, and does not break through , and the market suddenly turns and moves in the opposite direction . Yet another way that support/resistance is able to give way is when prices jump through the anticipated level of resistance and continue on higher . The gap, or as we call it, the "pop" can be startling and sudden and can take a trader by surprise . In these days of 24hour markets and electronic trading platforms there are fewer gaps like this that occur since trade occurs overnight and there is not a long time without trading . Still gaps are sometiems seen, and we need to know how to trade them . The thing to remember when taking technical analysis training is that after it is broken, resistance becomes support and support becomes resistance . Usually the previous support and resistance will be tested by the new prie level and then will go on up in the pop's direction. Way number three that there is a breakdown of support and resistance is when prices slice on through the barrier that is anticipated like a knife through a bowl of jelly , like there was no support or resistance even there .... and that's exactly what occurs . The price slides on through. We see this occur when we anticipate support or resistance on one time frame but there is no backup from a time frame that is higher. If, for example, we see resistance on the daily but there is nothing yet on the weekly chart we should be on alert . This is a point that is so important when it comes to your technical analysis training when in reality, the phenomena you believe is there, really isn't. This is a particular situation where the time period of lower technical analysis shows support, but it is nonexistant in reality, or if it does exist in the real world it is weak and the effect on the market is pretty much nonexistant. The astute multipletime periodtrader will realize what is happening because no higher time period tools setting up the area will be there. The great thing when this happens is that it quickly can be seen and we will be able to determine very soon that this is a negative pattern and that that there is no resistance/support in that area . Author: Peter Markham is a Forex and financial futures trader with 30 years practical experience in the markets. He received his education in Sydney and Los Angeles and has been a trading consultant worldwide. He has written widely on Technical Analysis Training. Among the many choices Peter recommends this
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Published on Feb 5, 2010
The market's reaction to support and resistance can happen in a lot of different ways ... As you take your technical analysis training, her...