Professional Support And Resistance Part II

Welcome back traders and investors. This is Rob Hoffman from Become a Better Trader, here to  share more key tools and techniques that you must know if you want to learn how to trade like a professional.

Because this is such an important concept in my opinion, it is really important for you to understand this technique.  So, I elected to make a second video, seen above, to further dive in to this concept.  I think this will really help you understand its importance. If you watch the video above, you’re going to see that  we’ve actually pulled right back into that key support band. This area continues to be an area that we covered in the previous video and article, not just here and here and here and over here, all these areas were originally identified well in advance by the technique that I’m about to share in greater depth now. So with that being said, let’s go ahead and get right into the concept.

How are we able to identify that this area right here, this $85 area, was going to be an important area? I’ve been talking about this in my swing trading videos and how do we look at that?. Even traditional support and resistance analysis here would identify a point like up here and a point down here. But how did we know before we even got to this point that this point may be an issue in the first place? And then subsequently, how do we identify more and more issues as we move forward, which continued to cover in the swing trading videos. How did we know in advance that this would become a point? Most of the time, we have to wait until after the fact to then draw the line. Now we ultimately get use out of it in the future when the market returns to the area where we have drawn the support and resistance lines. But how can we have gone in and determined that that area may be an issue in advance?

Well, if you’ve been keeping up on the professional series of videos I’ve been putting together here, what you can do is you’ll notice, right back over here  That we have a potential accumulation bar. This is a bar, as illustrated in the video above, after we had this big nasty gap down on Netflix here, the first day where we actually had any sort of signs of buying in this market was right back over here. So what happens is, that’s an area then that I want to mark.

How do I mark that? As I showed you, what I like to do is take those areas from where they close to the low of the bar. In this particular case, we’re identifying accumulation. And then of course, from the high of the bar to the close if we’re identifying distribution. But what I’m looking at is I take that area and I draw that out. So now that whole band right there becomes, in the future, an area of potential support or resistance. So what happens is, if you recall, one of the ways I look for failures in this is if once we identify this key support and resistance level, if we start trading below it, then I’m looking for much deeper selling. That’s exactly what happened in the video example above with Netflix.

So meanwhile, once we roll back into that key resistance level – which was support back here until it was broken, then it becomes resistance –. So that original area of accumulation or distribution, which in this case was accumulation, we end up finding an opportunity here to identify well in advance where we’re likely to see distribution. And then of course, that carried on into the future analysis that we had in our swing trade videos. So this is another way to tie some of those different pieces of the puzzle together, even from some of the videos I’ve posted at www.BecomeABetterTrader.com. So keep watching those, keep learning from them and keep reading the articles that I am posting here. I hope this helps show some of the key concepts on more professional thinking as it relates to support and resistance.

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Professional Support and Resistance Part I

Welcome back traders and investors. I’m Rob Hoffman from Become a Better Trader, here to show you more key tools...

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