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Varchild2008 (83.82)

Resistance is Futile!

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December 20, 2011 – Comments (0)

Resistance is Futile!

Following idiotic resistance levels that is....or pivots or support levels.

The logic is lacking big time and I am getting inundated with "Gamestop has crossed the pivot point and is now attempting to surpass the resistance level....but the support level ...."

What a load of CRAP!!!

Here's how I factor in Resistance Levels and Support Levels:

1)  A Resistance level should be the share price that is the highest price previously achieved as the share price goes UP before going DOWN....during an overall...downturn in a stock price....preferrable a 3 months long downturn.

So you have a down trending stock....The stock price let's say is $45.17.  It used to be $60.25 as the starting point.  As the stock goes into a downtrend there will be days where the stock price trades higher.  On those days where it is higher, you keep note of the highest closing price during the period of time it is higher.

The stock is down trending..... So eventually it dips and produces a lower low.....then goes back up to produce a lower high......then a lower low.....then a lower high....

So...To put it simply....  If you know what the previous "lower high" was then you know what your stock's resistance level is.

Because if you have a 3 months long pattern of lower highs and then all of a sudden the share price produces a higher high....THAT is what breaking through a resistance level should mean.

Got it?

Hopefully you do....  Unfortunately, Comtex Smartrend....and a whole host of share price trackers simply do not get it... They come up with insanely stupid resistance prices based on some insanely dumb formula.

The SIMPLEST answer....is the correct one..always!

2)  Support Levels:     Simple..... During an overall UP TRENDING stock (preferrably a 3 months long pattern), when you have a stock producing higher lows.... then you have support levels as the lowest price produced during the last DIP period.

As a stock that otherwise is UP TRENDING......actually starts dropping in share price.....you look to see if it drops below what it has ever traded for in the last period of time in which it fell.

If you see that a brand new LOWER LOW was produced then all of a sudden you have a stock price that BROKE THROUGH the SUPPORT LEVEL!!!!!!  OMG!!!!

Higher Lows = Support Levels are working for the stock....

Lower Highs = Resistance Level is keeping the stock down...

Really.... This stuff is simple when you get the hang of it....  Why on EARTH complicate the chart technicals any further than this???

I see multiple stupidity articles flooding the (GME) Gamestop Charts Page on Scottrade with all of these FAKE  resistance and support levels having nothing to do with tracking the LOWs and the HIGHs.

I look for the pattern of HIGHER HIGHs and HIGHER LOWs and I track it....

Oh and the absense of HIGHER HIGHs combined with HIGHER LOWs can still be classified
as an UP TRENDING stock....  The Higher Lows are far more important for stock prices than producing a brand new 52-week high.  Especially when share prices often get ahead of themselves and have to drop down and consolidate for awhile.

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