Chart-Formations.com

Support and Resistance Indicators

Support and Resistance indicators are used to determine probable levels at which the current trend might experience resistance to further buying or levels at which support may hamper further selling. These indicators can generally be grouped into indicators that plot trendlines, such as Gann lines, Speed Resistance Lines (SRL) and Fibonacci fans, and indicators that plot support and resistance lines, such as Fibonacci retracements and Fibonacci extensions. Some of them, such as Andrews' Pitchfork and Envelopes, also plot trend channels. As such, these indicators are well suited to use in trend following trading systems and strategies.

The Fibonacci retracement levels, which suggest a number of possible support or resistance levels, is the most widely used support and resistance indicator among technical analysts. Other popular support and resistance indicators include: Fibonacci fans, Andrews' Pitchfork, Speed Resistance Lines (SRL), and Envelopes.

Most charting software packages have these indicators as drawing tools that can be drawn directly on the price chart. The technical analyst is simply required to identify the start of the current trend and draw the initial line at the significant market tops and bottoms that mark the start of that trend. The drawing tool then plots the subsequent set of lines that determine probable support and resistance areas.

Fibonacci Projections

Fibonacci price projections is a support and resistance indicator that uses Fibonacci ratios to analyze price movements and identify potential support and resistance levels. It differs from Fibonacci price retracements and Fibonacci price extensions as it is used a to plot possible support and resistance levels that the dominant trend may encounter following a short period of correction or consolidation.

Here the significant Fibonacci ratios are 61.8%, 100%, and 127.2%. Of these, the 127.2% ratio is the most significant. These levels are drawn from the previous low to the high in an uptrend or from the previous high to the low in a down trend and shifted to the low for the correction. Once these points are selected, Fibonacci Projections will indicate levels ...

Wealth Warning

Trading equities, options, derivatives, currencies and cryptocurrencies, commodities or any other financial security can offer significant returns BUT it can also result in significant losses if the market moves against your position. It requires a strong commitment to skill development, knowledge acquisition, and emotional control. It should be treated as a business with a clear business plan, proper risk analysis, and a defined set of attainable goals. The risk associated with trading the vagaries of the stock markets is probably the most important consideration as it has a profound effect on a trader's emotional control. You should not trade the stock markets with money you cannot afford to lose as there is considerable exposure to risk in any stock market transaction.

Furthermore, the past success of any trading method, strategy, or system is only indicative of future success. Under no circumstances should past success be misconstrued as a guarantee of future success!

Unless otherwise specified, the trading systems and strategies discussed on this website are intended for educational purposes only and are not meant to recommend or promote any trading system or strategy. You are expected to do your own research and testing to determine the validity of a trading method, system, or strategy on the market and instrument you wish to trade.