I'm going through Lessons 15-20 right now where there is lots of discussion about nearby support and resistance and coordinating it with the various time periods. I've noticed that right now on the OEX, the nearby support regions for the yearly, quarterly, monthly & weekly all have a top of almost the exact same point of 581. It is my understanding that this is would make an extremely strong support zone, but should I necessarily assume a strong trend run up on the daily for the next few weeks? ie. does the overlapping of the nearby support for multiple time periods add more energy to the PLDot?
J.B.
Nearby Support/Resistance
Re: Nearby Support/Resistance
The answer is.... yes but....
You have to look for support *that holds* in anticipated areas of support. If support is going to hold,then you will see this first on the lower time periods, and then on the next lowest, and so forth. Nowhere is it etched in stone that nearbys *must* hold; the market can always break through to lower levels. It is likely that you will see some reaction however. In any case, it is the lower time frames that will guide you as to what is actually happening as it happens. You will recall this exercise from Lessons 8 and 9, no doubt. But you are quite correct that when the market is a long way away from the Pldot, one starts to be very alert for signs of termination.
You have to look for support *that holds* in anticipated areas of support. If support is going to hold,then you will see this first on the lower time periods, and then on the next lowest, and so forth. Nowhere is it etched in stone that nearbys *must* hold; the market can always break through to lower levels. It is likely that you will see some reaction however. In any case, it is the lower time frames that will guide you as to what is actually happening as it happens. You will recall this exercise from Lessons 8 and 9, no doubt. But you are quite correct that when the market is a long way away from the Pldot, one starts to be very alert for signs of termination.