Why support becomes resistance

[tradingjournals]

Post a chart, show to people where you think the explanation is wrong, and let them explain.

 

[dbphoenix]

Quote from BobbiDigital:

I feel like these are all textbook responses with no substance. Traders that move markets aren't flying by the seat of their pants nor are they losing money when price moves against their entry point. Anyone out there with me on that?

Yes.

When you mentioned liquidity, were you suggesting that that is the textbook answer or were you suggesting that in liquidity lies at least a partial answer?

 

[BobbiDigital]

Liquidity is the answer, but there's a whole story behind it I'm driving at and that story isn't technical, it cannot be explained by a chart though it certainly can be observed.

fwiw This is meant to be a genuine discussion for the sole purpose of helping myself though even better if it helps a few of us.

BD

 

[xelite777]

Quote from BobbiDigital:

I feel like these are all textbook responses with no substance.

Beg your pardon?

Seems like you are trying to re-invent the wheel.

 

[jack hershey]

Quote from xelite777:

Fear and greed.

Once a support is broken, buyers are now in pain and there are obviously more sellers so the price goes down.

When the price revisits the previous support, the unfortunate buyers see this as the last chance to get their money back, so they happily sell to liquidate their losing long position and break-even.

Also, traders who did not short the breakdown the first time now have a chance to join the new downtrend, so they sell too, and the price drops again.

Old support now becomes new resistance.

try again.

the minority conrols the market.

 

[jack hershey]

Quote from BobbiDigital:

I feel like these are all textbook responses with no substance. Traders that move markets aren't flying by the seat of their pants nor are they losing money when price moves against their entry point. Anyone out there with me on that?

Yes you have been reading BS from others in this thread.

 

[xelite777]

Quote from jack hershey:

try again.

the minority controls the market.

Try again yourself, "Master" Jack-Hershey-I-am-better-than-you-and-I-know-the-secret-of-the-Universe.

Pffff....

 

[dbphoenix]

Quote from BobbiDigital:

Liquidity is the answer, but there's a whole story behind it I'm driving at and that story isn't technical, it cannot be explained by a chart though it certainly can be observed.

fwiw This is meant to be a genuine discussion for the sole purpose of helping myself though even better if it helps a few of us.

BD

If you already know the answer, then it sounds like the thread will be less a discussion and more trying to guess what you're thinking.

Be that as it may, support and resistance are what they are because of a lack of liquidity not because of it. Liquidity is found in the middle of the range, not at the extremes, hence the reversals.

 

[Fractals 'R Us]

Quote from BobbiDigital:

I feel like these are all textbook responses with no substance. Traders that move markets aren't flying by the seat of their pants nor are they losing money when price moves against their entry point. Anyone out there with me on that?

true 'dat... it's about knowing where the battle line between the shorts and longs is.

 

[xelite777]

Quote from Fractals 'R Us:

it's about knowing where the battle line between the shorts and longs is.

True.

And support and resistance lines will tell you that, if the trader can draw them correctly.

And we are back to square one.

PS: quite frankly, who cares about the "why this or that happens?", if we can consistently make money ($$$) with certain repetitive and simple chart patterns, like support and resistance levels?