DETERMINING SUPPORT AND RESISTANCE

When a chartist looks at a bar graph, accumulations of highs and lows are often seen as key market levels. Breaking. through these points signals important changes in the expected direction of prices. Candlestick real bodies, however, may turn out to be better for this task. Much like highs and lows are on bar charts, an accumulation of real-body highs or lows at a given level is significant. An example of real-body resistance levels can be seen...

Observation is the best friend of the technical analyst.

Observation is the best friend of the technical analyst. By watching the markets, I noticed something interesting about candlestick charts, which I use extensively. I realized the real bodies used in candlestick charting can be used to determine significant support and resistance points, a strategy I had never seen before. Take a look at how it can be done. Although they have only recently become popular in the Western Hemisphere, Japanese traders...