Quote from ammo:
you cant really read those , the deepest areas are cleavage and the widest are nips,the nips are where the most trades occurred at a single price timewise, we tend to reach those in a rally or selloff,the cleavage are sort of like gaps ,the deepest part somehow acts as a magnet,on the chart below ,3 month the ovals are nips( 1164-62....1139.....and 1094-93) the obtuse squares are cleavage(1156-49...1130-26) and the 2 straight lines are ledges(1159..1108..1102)...we tend to gravitate back to these areas and fill in this graph over time, unless there is a major rally or selloff, a not so major move will stop at these areas, since they are all lower,you would cover shorts here, so expect a move to 1163 if they can ever get any selling pressure,cover,trade the bounce or wait for it to peter out and ride it back down to 63,see if it holds a second time,if not ride it to 56-49 cleavage and cover again,ride it back up to the 1159 ledge as resistance and down to the 1139 nip,wash.rinse repeat. if you hand chart you will see this occur on a daily basis,its much easier to read and trade,if you spend a little time with the daily ,the way the market backs and fills is a little easier to read on these longer term charts
