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Technical Analysis Training Course - Some Common Patterns of Support and Resistance

By: Ted Hearne

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The market can react to support or resistance in a lot of different ways ...

As you pursue your technical analysis training, the following are some patterns that can be observed when that happens in the market .

One that we may refer to as touch and away as if the market continues to reach for a support resistance level , and then when it gets in that vicinity , it suddenly reverses and goes in the opposite direction , as if there was a build-up of pressure that is suddenly released . An exhaust is what this is . This is a formation where there is holding of the resistance level. It's a pattern that looks like it's trying to get on through, by worrying the level of support or resistance like a dog might chew a bone , but it doesn't work out, and it doesn't get through , and instead the market turns suddenly and goes in the direction opposite.

Yet another way that support/resistance is able to give way is when the prices pop up through the level of resistance that is anticipated and go up even higher . The gap, known as a "pop" can happen suddenly and may surprise a trader . With today's markets that are 24 -hour and the trading platforms that are electronic there are fewer gaps like this that occur as the overnight trade is continuous and not a long time where no trading occurs. Nevertheless we do see gaps occur , and it's important to know how you should trade them . The thing to keep in mind in your technical analysis training course is that when broken , support becomes resistance and resistance becomes support . Usually the previous support and resistance will be tested by the new prie level and then will go on up in the pop's direction.

Another breakdown of support and resistance that occurs is that the anticipated barrier is sliced through by prices as a knife cuts through soft butter, like there was no support or resistance even there .... and that's exactly what occurs . Price quickly scoots right on through . We see this occur when we anticipate support or resistance on one time frame but on a higher time frame there is nothing that backs it up . One example is that if the daily shows resistance but to that point the weekly chart shows nothing - we should stay alert.

This information is an important part of technical analysis training course - when what you think is there really is not . It is a situation where the time period of lower technical analysis shows support, but it does not exist in the real world , or even if it really exists it is weak and has little or no effect on the market . The trader who is astute will be alert to this situation because setting up in the area there won't be higher time period tools . The good thing in this situation is that we can see it quickly and you can quickly see the negative pattern and that that there is no resistance/support in that area.

Author:
Peter Markham is a Forex and financial futures trader with 30 years practical experience in the markets. He received his education in Sydney and Los Angeles and has been a trading consultant worldwide. He has written widely on Technical Analysis Training. Among many possible technical analysis courses Peter recommends following this link http://squidoo.com/technicalanalysistraining for an original and productive trading approach.

Article Source: http://depositarticles.com/

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