Do support and resistance work on indices?

[nattybumppo]

Thanks for the responses on this. I have done a small amount of research on my own chosen instrument, the Dow 30. Although there are some likely looking support and resistance points from time to time, it is hard to say whether they are likely to be tradeable, or if they are just a trick of the mind to see patterns that are not really there. I’ll have to write some code and test it. Intuitively it seems more likely that such levels would occur more on stocks and commodities, as presumably traders sit on the sidelines waiting to invest in them (or cash out) at certain price levels. But maybe they do it with indices too.

Looking at the charts, I'm still doubtful, but I’ll crunch the numbers at some point and have a better look.

Trading ETF's that duplicate the major indices (and futures contracts too) is very popular. Look at the chart as a graph rather than candles or bars and I think it will be easier to draw the trend lines. Nothing works every time, but it appears to work too frequently to be random.

 

[oraclewizard77]

 

[fxcode]

Good question OP. I’m wondering that myself...hmm.