S and R is largely determined by viewing price and volume charts from the viewpoint of owners of both long and short positions. Potential participants who may enter are facing these "holders"
All transactions take place by agreement only on price and no agreement on all other aspects. Volume velocity is the key measure of the agreement phenomena.
BSAM and Socal Trader point out the importance and aspects of volume
S and R are affected mostly by the change of ownership over time. That is to say, it is an issue of "turn over". The period for one turn over varies by the number of participants and the volume that they create. Traders vary greatly in how long they hold to make a cycle of profit (loss).
So periodically, you need to refresh your values of S and R. You will see that most books, approaches, and narratives of the markets deal on "levels". This implies sets of horizontal lines, etc.
To get this stuff understood and to give it utility to make money, you can look at price and volume over time to be sure to include enough time for "turnovers" (more than one is better). Osman deals with a method to deal with this.
Definitions ( like Profit Logic) help to create a focus. The "how to" does not come from definitions alone.
Some people strike out on the "how to" because they do not have things understood (primarily from mistaken myths that they believe). See misunderstandings by DKT, DBPhoenix and Wallace. Others have presented the cautions on these items. Don't go there.
By looking at historical charts, you get to learn how to determine the S and R and little s and r's too.
Agreements on price by numbers of people determine where the market may operate and where it may not. You can scope this out by regarding all possible periods of "positioning" by all participants. these are the "envelopes" you can scribe on all fractals. The bounds narrow as you choose to focus on the faster and faster traders. Different traders, of course, have differing S and R limits. These are usually defined by the periodicity of their trading.
Making money is not difficult if you operate with limits such as S and R and you know how to follow trading as it comes to these limits. you trade opposite to "whipsaw" type loser traders.
S and R eliminate the "falling off the edge of the earth" concept.
I look, always, at three levels of S and R.
Strong price agreement over a range of prices creates movement over that range. Nice fast paced channels result. High money velocity profits as a result of pleasant staedy unidirectional movement.
BUT, you see strong volume at places where price does not move much at all. Here periodic and frequent volume surges move price to limits for strong volume. Lots of agreement and a return to a stationary point. A lateral trading channel appears as a result of repeated testing of a limit.
Low volume is never at any of these limits.
The "how to" comes down to one effort that can be done in advance of the time you trade. A good example recently was the FOMC "greenspan" move a couple of weeks ago. Both the high and the low of the swings hit he R and S respectively that you would have on you chart. Yesterday the trading followed suit simarly with respect to the ovdeernite H/L.
To have S and R bounded at all times on all levels, use channels for the LT, IT, Daily, and intraday. The "four crow" post is an example of a channel ending at R (failure to traverse), point 1 forming and the next intraday channel commencing.
Channels are cut off at R (flat top pennant failure) and S (Flat bottom pennant failure). Between R and S pennants are neat trend resumption formations (end of left to right traverses at right trend line.
By having all R's and S's scoped out as channels for all fractals, you know in davance where the successively faster channels are going to end. Thus, you can reverse at price extremes and NEVER EVER do the "whipsaw" game that losers do all the time.
Do not follow nor depend upon the poor references in this thread.
Guess we're going to have to disagree on this one. Or maybe I'm not understanding your terminology.