Support and Resistance – a Numbers Game

Usually, the S/R numbers I have on my daily worksheet work. In a breaking market, like todays, the market will at least stall at my support levels. It's a good idea to learn to trust your numbers and when they fail, know the market is headed to the next level. When that happens I interpret it as there is more conviction in the direct it is headed to take it to the next area.

My S/R levels come from deviations of the settlement price, Value areas and intraday ranges,weekly highs, lows and deviations.

S/R numbers aren’t meant to be hard figures. Especially when you have a huge stadium filled with unpredictable traders like there is in the S & P. Your S/R numbers should be considered as “Areas to do Business” and its how the market reacts at these levels that should trigger your trade. I use the position of locals and the aggressiveness (or lack thereof) of Paper trading around these numbers to tell me that we are changing direction at a level.

But I have to tell ya, I didn’t have a darn thing at 83.5. Nope not a thing. But Swiss Bank sure did because they came in aggressive and relentless buyers. The locals saw this too as well as other bids coming into the pit. As they sold to Swiss they flipped them in the mini so they wouldn’t get stuck short. They knew the market was done (at that time) going down and they didn’t want any part of being short.

But when the market turns and isn’t at one of my S/R numbers you can bet I am looking for a retest of the area and head to one of my numbers.

Tim Mack