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Lesson 19
Posted: Thu Oct 09, 2008 8:24 am
by Trader Question
In lesson 19, video 1.3, screen 44, it says" weekly resistance may be strong due to the monthly(not shown).
Q: In this example, without looking at the monthly, can we still say that Weekly resistance is anticipated to be strong, because it exhausted in weekly 5-9 down in previous bar. This exhaust will make nearby strong.
H.B.
Re: Lesson 19
Posted: Thu Oct 09, 2008 9:20 am
by pldot
Yes, you can, except that it is not the weekly exhaust that *makes* weekly resistance strong, but the fact of the exhaust that indicates that the weekly resistance is in fact likely to *be* strong. In theory it usually would be the HTP that causes strength or weakness in the LTP.
Re: Lesson 19
Posted: Thu Oct 09, 2008 9:21 am
by Trader Question
OK, in other words, if weekly reaches further out resistance, we can have 2 scenarios, each with different implications:
1. Weeky in further out resistance in the context of monthly resistance: it is exhaust and expected to make following nearby resistance strong.
2. Weekly reaching further out resistance WITHOUT the context of monthly resistance area: This is not exhaust and we don't expect following nearby weekly resistance to become strong.
I hope I am getting it right.
Re: Lesson 19
Posted: Thu Oct 09, 2008 9:22 am
by pldot
Not quite. Exhausts are treated more fully in Lesson 23,,, but... a couple of different elements to consider, in addition to pric reaching furtherouts, or, breaking nearby outter limits... and that is... next bar's nearby's holding, price reversal occurring, and the location of the price stopping re higher time periods, and location of exhausting price bar in terms of breakout, i.e. early in trend or no. You scenario 1 below isright, scenario 2 is more complicated and may or may not be true depending.