Support and Resistance Indicator – 7 FREE Indicators with Example
Support and Resistance Indicators track price movements, with Resistance Point representing the peak of rise, where resistance is sold, and Support Point representing the trough of fall, where decline is bought.
Resistance Zone occurs when multiple resistance levels occur at the same price level (within 3% Price band), while Support Zone occurs when buyers become as powerful as sellers, halting price decline at around the same level (within 3% Price band).
PRO TIP: Resistance and Support Indicators represent psychological barriers for future price action, with recorded levels or zones representing future price stops. Once broken through, these zones switch functions, causing previous support to become resistance and vice versa and it can be statis or dynamic.
Highly reliable Support and Resistance Indicators
1. Trendline
2. Moving Average
3. Pivot Points / Fibonacci Levels
How does Support and Resistances are constructed by Manually?
Common human reactions to stock decline and ups and downs are displayed on charts through correct Support and Resistance levels, indicating potential opportunities for future purchases.
Advanced Support and Resistance Indicators (Algo Secrets Revealed)
1. DeMark or William Method : Developed by Tom DeMark and Larry Williams and Support and Resistance Indicator criteria are as follow:
- Look for every single CandleStick / Bar
- Observe every CandleStick / Bar’s previous two candles/bars and next two candles/bars
- If two candles on both sides are having ‘Higher Low’ then this candle/bar qualifies to be called as a Support point.
- If two candles on both sides are having ‘Lower High’ then this candle/bar qualifies to be called a Resistance Point.
2. Percentage Method: Advanced Support and Resistance Indicator is a popular method for Algo Trading Strategies, where traders backtest their trading ideas and determine the optimal Stop Loss level for their strategy. (Here we have used 1.07% level)
3. Gann Two-Day Swing Method : W. D. Gann’s swing method is similar to the DeMark’s or William’s method.
To find a Support point or Through the required rules are as follow:
- Check every candle/bar one by one
- Observe price behavior of two following days
- If these two days’ price chart is showing ‘Higher Highs’ than the low candle/bar, then the low candle/bar is Support Point or Trough Point.
4. High Volume Method: Shooting Star Candles / Hammer Candles with very high Volumes can also identify a significant reversal point however intraday action must be inspected to see at just what price level the majority of buying and selling occurred.
How to draw Support and Resistance Zones PERFECTLY
