Why support becomes resistance
- Thread starter BobbiDigital
- Start date
Threads started in the "psychology" section (sometimes refer to as the philosophical section) usually are like this...tons of words, lots of subjective opinions as expected.
In addition, the subject title has the big WHY question to ensure its like this just in case someone actually does give a subjective answer that the OP (thread starter) will except.
The following topics have great online articles by trader psychologists, trader philosophers, academic scholars, Wall Street...all easily searchable on Google for one to find an answer that's acceptable to them.
1) psychology of support and resistance
2) psychology of fear and greed
Lots of intelligent subjective answers. Yet, if someone is looking for objectivity, its best to start these types of threads in the "technical analysis" section instead of the psychology (philosophy) section of Elitetrader.com
Just like Woodward and Bernstein we, who believe the charts really do tell us all we need to know, are attempting to follow the money. I, for one, don't believe it is possible or neccessary to extract motivations fro most market moves. The fact that it has moved in a particular fashion is enough.
There is never any substance in these types of threads because the majority of responses deter the subject, which is no coincidence.
When the market goes down who is buying? Deep pockets that are not making directional bets. Doesn't seem like a good guy to side with (huh the trend is your friend) 'Moving a market' ie putting in a counter swing point then can be considered nothing more than an advertisement IN THEORY.
Did you know this before you started this thread in the psychology (philosophical) section or did you come to this conclusion after starting this thread that has followed all other prior threads on this particular aspect (psychology) of support/resistance ???
That's the funny thing about these types philosophical discussions trying to explain why folks view something as support and why folks see something else as resistance...
Enjoy the discussion because what you see as not having substance today may have substance at a later date when you develop a better understanding of the markets.
With that said, there is not "only one LOGICAL explanation" (your words) and I think you already know such via the fact you started this thread in the "psychology" section.
Markets does what it does each trading day for different reasons. One day its due to economic reasons, another day its due to political reasons, another day its due to technical reasons, another day its due to reasons abroad in other countries because markets are globally connected than ever before, another day its another reason or a mixture of any I just said.
Trying to look for "only one LOGICAL explanation" as an umbrella for all the above daily different reasons doesn't seem logical in my opinion. That's why, 20 years ago, I finally accepted that the substance I see involving support/resistance one day is caused by a different reason for support/resistance tomorrow. Just as important, because we are different (you and I) as a person, even if we come to the same conclusion something is support/resistance...good chance we're going to react differently to the exact same support/resistance when our hard earned money is on the line. That's what money does to folks.
The key for me is to manage those daily changes in reasons when my hard earned money is on the line and then try to exploit those price areas that reacts to those different reasons.
P.S. I'm one of those that like to document the WHY a key price area is what it is. Thus, I prefer to understand WHY something is what it is via my personal view of the markets and then use TA to manage my trading in those key price areas that have different reasons for such on any given trading day.
The point of this thread is to put something tangible behind what you see on a chart, excluding use of the order book. For me, it's understanding who is in control, where, and what their objective is. Big traders have to trade with big traders. Now, what I am really interested in is how those large orders are handled when the market disagrees with an advertised price (swing point). It seems to be 'free money' for someone not concerned with the direction, but their objective.
BD
BD
