How To Identify Strong Support & Resistance

How To Find Strong Support & Resistance

Intro: 0:00
What Is Support And Resistance: 0:24
Static Resistance: 0:57
Dynamic Resistance: 5:35

If you've been watching me, you're well aware that I am a technical trader. I use charts and indicators to make my trading decisions.

In the world of technical traders, some of the first things you learn are support and resistance. These are levels in the markets where the price tends to gravitate towards. A lot of this is simply due to human psychology....we like nice round numbers.

But as I'll discuss during today's session, there are a LOT of opinions on the best method for plotting these levels on the chart, and how to find support and resistance in stocks, and show you the best way to plot support and resistance.

For the most part, there are two types of analysis (or some combination of the two) that traders perform before entering a position:

Fundamental Analysis: This is primarily looking at the financials of a company and making trades or investments based on this information.
Technical Analysis: In this type of analysis you don't pay any mind to the financials and focus only on the charts.

So what exactly are support and resistance? And why should I care about support and resistance levels in my trading? Support and resistance are levels that prices have a problem moving through, with support typically below prices acting like a "floor," and resistance typically above prices acting as a "celling." There are two types of support and resistance: Static, and dynamic.

Static can be a line or can be at an angle. Now with a support line, sometimes called a trend line, is a line where a price bounces off and comes back down to the support line. With a resistance line, this is the line where the price bounces of as it's rising, back down.

There are 3 ways to find strong support and resistance:
1) Zoom out.
2) Focus on the "big support and resistance" lines.
3) The more "touches" the stronger the support/resistance.

Now let's talk about "Dynamic" support & resistance lines. This is where we are looking at moving averages: 50, 100, & 200-day moving averages. There are some downfalls to using these moving averages, & some traders like to use "Fibonacci numbers:" 5, 8,13,21, ... The Static support/resistance lines are usually stronger than the dynamic support/resistance lines.

To wrap it up, finding strong support/resistance lines is both an art, AND a science.

The Wheel Strategy Playlist:

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Do you have a better understanding of how to find strong support & resistance lines after watching this video? What other topics would you like me to cover in another video? Let me know down in the comments below.

Here is a link to The Options Wheel Strategy Playlist:

[dennisdougherty]

Great information ! Thanks again Markus !

[MEATX]

Very helpful since I didn't know the moving average was considered a support/resistance strategy when buying long on stocks. I feel more comfortable using the most touch points for the lines.

[jevescio]

Great Summary... Thank you again . Happy Thanksgiving!

[MrWorldShoe]

I love all of your content. Purchase the book and I just have to say you have been great a great guidance and motivator on my trading journey. Currently on the path to profitability but I have no doubt I am on my way there. Kudos to your programming 👌

[sonny]

Thank you this helped I learned something new today

[sk]

Thanks for the video. Just want to ask what time is best to draw support and resistance. I do day trading on 5 min time frame and also use 15 min time frame for entry and exist.

[jakewhite]

I enjoyed this video almost…..almost as much as I am enjoying a Markus Burger right good. Thanks for the education…one day, when I grow up (I’m 52) I want to be like you

[manuelh]

Thanks and enjoy the Thanksgiving Holiday. 👍

[MaxF]

Do you use this with PowerX strategy? If yes, how you use it? If not, why?

[nfekeskxnxngntnrkdkcn]

Would this work for day trading as well?