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Historical Simulator Plug-in

Support & Resistance

Video Transcript

Now that we've established what a downtrend, and an uptrend are, what we see now across the top of this where I've drawn this line, is this. This is the markets go up and down across this, this wave formation. They bounce their heads, it seems off of this line that we've drawn here. This area is called the resistance line. Then, across the bottom you'll see that we have the same kind of line. This is a support line, it's the floor. So, it's basically the floor and a ceiling. You can see support and resistance. Markets will tend to bounce between the support and the resistance. Come down and touch the support, go back up to the resistance, back down to the support, back up to the resistance. Just knowing that one little piece of information is quite valuable to you. Because when a market starts to trend, you can know that it's going to start creating floor and resistance points. Now, we can go into almost any chart and find support and resistance. Let's pull up a corn, 2007 Contract. Support and resistance doesn't have to be, and isn't only on an incline. We can have support and resistance that is just perfectly flat. If we go sideways, like part of this Corn contract- let's see, just right across the bottom here, would be considered an area of support, right there. Here's another area of support, we can see that's not in a perfect line. That would be an area of support, right across there. Now, they don't have to be perfect. See how that's breaking down through there a little bit? That's okay, they don't have to be perfectly lined up. But they have to be right close, where they're coming down and touching an area. That's considered support.

Now, the resistance area is of course at the top. We have some areas of support, or resistance, right in here. If you look, there's a shorter area of resistance right across that little top right there. Let's look back in time, look at this! There are some other areas of support right down on this line down here. Look at this, right down through there. Then, of course, we have the resistance point. Right down through here, see where all those came up and touched and hit those lines? That's support and resistance. Support and resistance is very important because as a market is trending, it shows us areas where we can expect it to go down to, and meet. Often times you'll find that markets will test areas of support and resistance, before they break through them. You'll want to test those areas, to see if they can break through that support and resistance areas, and continue on in the direction. So, let's just pull up another chart, real quick. Let's pull up- well, we'll look down through the list and find one. Soybean Meal, well, almost anything. Let's grab an August, September Soybean Meal, and let's see if we can identify some support and resistance areas. I want you to do this on your own, look at that, one great big- let's just shrink this chart, just a little. Bring that up, and we have another support and resistance here. For narrowing climbing channels, that we can use. It draws our support and resistance areas for us. You can see little channels that we're creating with support and resistance. So, let's see if we can see this all the way across here. This would be considered a nice little area of resistance or support, right through there. Where the market comes down and tests it, comes down and tests it again. comes down and tests it again.

Let's see, a nice little sideways one going here. Another one, right underneath it. Areas of support and resistance. You can find it all the way through charting. Everywhere you look, you're going to see areas of support and resistance. These are very good points for you to keep in mind, where your areas of support and resistance are. When we start placing orders, you're going to find, that we place our orders based on historical support and resistance points. So, keep in mind your historical points of support and resistance looking back. See, what I mean by that is, if you look right here, w'e're going to come down and we're going to test some areas of support and historical points of resistance. Now, see right here. See how this went kind of sideways here, and then we kind of bounce off of it right here. You'll notice that when charts trend, like this, that we have little areas where they'll correspond. Look at this, we have a little support and resistance here, and this went sideways over here. You'll see this, here's another spot here, another spot here, how they kind of reflect back in history what things did. You'll see it in other charts, I want you to look through some other charts. Grab one, and we'll look at something else, here, for fun. Let's go to, let's go to wheat. July wheat, so we can just grab any chart. Now, it doesn't matter, because each one is going to have levels of support resistance. See how this one tested the tops, here. Look at these tops, we come back and we touch these tops.

Up in here, and then later on the market comes down, and comes back up and tests those same tops, right in there. So, that's your support and resistance areas- testing each other back and forth between what happened, back several months ago. They'll go up and see if they can break those levels of support, or areas of resistance.

Then, it's going to be the same thing for coming down. Look at this, right across the bottom here, we have another area where it's coming down, and it's testing. Look at that, one right after another. It's tests these areas of support and resistance. See that?

Alright, now you need to go through and look at a whole bunch of charts and find as much support and resistance as you can. Try to identify where support and resistance goes back and has historical support and resistance.

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