Reaction High and Low Prices
Both resistance and support can be identified by location of reaction high and low prices. A reaction high is a price peak appearing during an in-range movement in price. The movement itself may be sideways or trending up or down; however, reaction highs are likely to occur following a downward movement, and the high price will set resistance. A single occurrence is not enough, however; resistance can be drawn on a series of reaction high prices.
The reaction low is the opposite. It is a price downward spike occurring within range, often offsetting (reacting to) a short-term rise in price. To set support, find a series of reaction low prices.
Key Point
Identifying a new level of resistance or support depends on ...
Get A Technical Approach To Trend Analysis: Practical Trade Timing for Enhanced Profits now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
