Stocks Technical Analysis Basics Part 5

Windows Support and Resistance

We talk about a rising window if the lowest price today is higher than the highest price of yesterday, while a falling window occurs if the highest price today is lower than the lowest price of yesterday.

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Figure 4.12: Windows resistance and support levels.

In figure 4.12, look at how windows constitute important support and resistance levels. The entire area of a window represents support or resistance. The support or resistance of a window is broken only if crossed with the closing price.

The height of the window has no importance (figure 4.13).

REMARK: It can be worthwhile to pass on support or resistance from a lower time frame like, for example, an hourly price chart to a chart with daily prices (or visa versa).

A certain support or resistance area is possibly a window in the hourly price chart, but it is not visible on the daily chart.

 
Figure 4.13: The height of the window is not important.

Confirmation of Support and Resistance

Turning points at a support or resistance level often are confirmed by candlestick reversal patterns.

Figure 4.14: Support and resistance confirmation.

In the chart in figure 4.14, notice the first reversal with a hammer pattern and the next two reversals with engulfing bullish patterns.

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