Today’s quick lesson is when an area becomes another area, so a support area can turn into a resistance area and a resistance area can turn into a support area. And how to be able to find it. And what does this actually mean? So the first example I’m gonna show you is here.
We have an obvious support area. Starting out right here. Right. So when we talk about support areas is we want to encompass the majority of the pivots, which is quite easy to see right here. We have one, two, three, four, five, six, seven, eight, nine, ten, eleven pivots. I mean, that’s a pretty, pretty strong support area. Right? So what does a mean, a support area?
It’s where the market keeps on revisiting. Right. It’s an area that. The buyers and sellers are fighting out, so, so far the sellers have been winning out because support usually comes at the end of a downtrend, which is right here. And what’s happening here is that the buyers and the sellers are fighting out. Any can totally change the direction.
So when you see a support area or a resistance area, you need to sit out and wait. Now, look what happens here. Whenever I’m in the live market, I automatically draw my areas to be further and further and look what happens here. This technically becomes a resistance area, right? Look at this, it becomes a resistance area. So does that mean. So.
Market was being in a support region and then you can move it around a little bit, right. And then it starts to hit this area again.
So support areas and resistance areas are. Aren’t fully precise, right? So we technically began with our support area here. Then the majority of the pivots started to go here. So we moved the support area here and then we can move it back down and around here, right.
Because this is proximity where it’s hitting. Whoops. And look what happens here now. It becomes a resistance area. So what does that mean? It technically just shows us that we have to watch where the market is hitting.
There is a very high probability that the market will now hit this resistance area and bounce off of it. That’s really all we’re looking at. Right. We want to be very cautious around these areas. So this is how support becomes resistance. And the same exact thing here.
The resistance area became a support area. So how does this work? So resistance areas are always usually at the top of an upward trend. It doesn’t have to be a huge trend, but it certainly has to be moving upward. Right.
Because we’re hitting a ceiling. So look what happens here. Look at the amount of pivots that it starts. Whoops. Let me switch that. So look at the amount of times it has hit this resistance area and it just keeps on hitting and hitting and hitting. So this is a very strong probability.
This is obviously a consolidation area. And it can turn into a transition area where the market starts to go down. We as traders don’t know that. We don’t care. All we know is that we need to watch the market.
And it finally breaks out. OK. So I’m always in sleep. Just draw a straight answer because the chances of the market revisiting that same area is always high. Right.
So this is when it now my resistance area turns into a support area. Look at here, OK? And what happens here is that the market is revisiting and it’s continuing up. OK. And year end, look, it actually goes back into a little resistance area.
So areas are just places where you need to be very aware of that they can revisit and that could they could bounce off from those areas. It is not for us to decide if it’s about to break through those areas. All we know is that we need to understand that those are areas and they could bounce off here. It broke through and it bounced right back here. Right. So what is this?
We have a resistance area which turns into a support area. Which turns into another resistance area.
And this is how we need to be able to understand and read the market.