You're welcome. But providing hindsight examples makes things appear a lot easier and more certain than they really are. Which is why gurus and vendors always use hindsight charts. Everything is crystal clear in hindsight. Real time, however, is another matter.
Let's say you have something moving south from 100 and it's all the way to 60. Then it stops and starts moving north. Is this a reversal? Or is it only a brief retracement in an ongoing downmove? You can be mechanical about it and bring in indicators and formulas and statistics and so forth like so many people do these days, or you can be a trader, recognizing that it's not just a dot floating in space but the print of transactions between buyers and sellers. There are many reasons why price may have stopped and turned, even if the "turn" was only a brief one, and without becoming immobilized by the "why?", you can apply what you know to the situation in order to make real-time sense of it.
For example, if you have the experience, you'll know that parabolic moves come to an abrupt and often terminal end. To do nothing in anticipation of a continuation is merely hopeful. A move in the opposite direction here is much more often a reason for an exit, particularly since one always has the option of re-entering if that is called for later. But, in the case above, let's say it's not this obvious. So we look at just how strong this maybe-reversal is, which is where the resistance line comes in handy. Does it break it or not? If it does, there's some evidence that this is a reversal and not just a retracement. But it's not enough. Is it forceful or is it wimpy? Does it run out of steam at the crest of the move with shorter waves or does it move ahead as if the way were free and clear, like a cork bobbing to the surface?
And this is where you have to keep your wits about you and not only interpret what traders are doing but anticipate and possibly second-guess them. Let's say you've been short all the way from 100 and you don't know whether to exit or hang on in hopes that there will be a continuation. The easy answer is that if you're hoping for anything you should get out immediately. Or maybe you're afraid that there won't be a continuation. Same answer. Exit and watch. Whichever way it turns out, there will be a later opportunity to rejoin the move.
But even if hope and fear are not part of the landscape, you still have to decide what to do. If the move north has been strong and broken the resistance line, you still want to wait for a slight pullback -- or retracement -- in this supposed reversal in order to go long. If you were short and exited that short, you're free to do whatever you want. You may think that this "reversal" was weak and that whatever pause may occur here is not a retracement in what will be an ongoing move upward but a retracement in an ongoing move downward. At the moment, without any regard for support or resistance, the only clue you have is that your resistance line was broken.
Perhaps the best way of dealing with this rather than indulging in a lot of useful hand-wringing is to place your buystop above what looks like it will turn out to be a retracement in a new upmove and just wait. If this is a retracement in what will be a new upmove, price will resume its upward course, stop you in, and you're long. If it doesn't, then wait for a lower low, which means that price will drop below your resistance line again (it happens). If it does make a lower low, then the odds have shifted back in favor of a continuation downward, and you have three choices: jump in when the lower low is made, wait for the hesitation which often happens in these cases and place your sellstop just below it, or wait for a pullback or retracement after this lower low is made, placing your sellstop inside the crest of it but far enough away from it so that you don't get trapped into a trade that doesn't go anywhere after all. Paradoxically, if the downmove is a good one, the last option will not likely come up because there won't be the necessary indecisiveness, which is to some extent what retracements are all about. You'll just have to be ready to jump in, if you're ready, but be ready as well to exit immediately if things don't go your way.
And to add another ingredient to the mix, if what you thought was a retracement doesn't work out and you exited your short thinking that it would and even went long, price may shrug all this aside and head south again anyway, only in this scenario it makes a double bottom. In this case, you may have an even clearer sign of a reversal since everybody has by now had plenty of time to think about it, and since you now have a more definite line in the sand, you can either plant your flag and place a buystop above this or bracket the trade in the event that the "double bottom" is after all a ploy (unlikely but possible) and be in position for a new short trade.
As a further help, of course, there are the macro support and resistance, such as in this chart:
http://cdn3.traderslaboratory.com/f...-markets-wyckoff-way-making-bazillions-d1.png
Resistance may have been of more definite help in these trades than support, but knowing in advance where to look for "reversal behavior" helped to take advantage of the two reversals at the January trading range, one in early April and one two weeks later (which we're still enjoying).
This is an ongoing process and you learn something new every day. The "schematics" and "templates" that vendors are so fond of may be helpful, but they more often encourage the trader to start thinking in terms of patterns rather than behavior, and the odds that he will make the wrong call at the wrong time increase that much more.
