Common Patterns Of Support And Resistance You'll Learn With Technical Analysis Training

When it comes to support and resistance, the market can react in various ways ...

As you pursue your technical analysis training, the following are some patterns that can be observed when this occurs in the market .

One we might call "touch and away" as if the market continues to reach for a support resistance level , and then when it gets in that vicinity , it turns and retreats, as if some pressure was built up and released. This is known as an exhaust. This is a formation where there is holding of the resistance level. It is a pattern that seems like it is trying to break its way through , by chewing the level of resistance or support like a dog might chew a bone , but it fails , and does not break through , and then the market makes a turn in another direction .

Yet another way that support/resistance is able to give way is when the prices pop up through the level of resistance that is anticipated and then they get higher still. The pop or gap can be startling and sudden and can take a trader by surprise . Today with electronic trading platforms and 24 hour markets we see fewer gaps like this since trade occurs overnight and not a lengthy period of no trading . Nevertheless gaps are sometiems seen, and we need to know how to trade them . The thing to remember when taking technical analysis training is that once broken , support can turn into resistance and resistance can turn into support. Usually the previous support and resistance will be tested by the new prie level and then continue on its way in the direction of the pop .

Way number three that there is a breakdown of support and resistance is that prices simply slice through the anticipated barrier like a knife through a bowl of jelly , just like no support or resistance existed....and that is exactly what is happening . Price quickly scoots right on through . We see this occur when support or resistance is anticipated on a time frame but on a higher time frame there is nothing that backs it up . For example, if we see resistance on the daily but there is nothing yet on the weekly chart - we should keep our eyes open .

This information is an important part of technical analysis training - when in reality, the phenomena you believe is there, really isn't. It is a situation where the lower time period technical analysis shows support , but it is non-existant in reality, or even if it really exists it is slight and weak and has little or no effect on the market . The trader who is astute will realize what is happening because no higher time period tools setting up the area will be there. The good news is that we can see it quickly and you quickly can figure out that this is a pattern that is negative and there is not any resistance or support occuring in the area.