Support & Resistance Exhaustion

A wider support or resistance band indicates a deeper market exhaustion event. To measure a resistance band, you measure between the candle wick (its end) and its closing price, also known as the off number”. The top of the HCL bar for Bullish resistances bands and the bottom of the HCL bar for the Bearish Resistance Bands. This concept applies to all time frames, although weekly a chart is most reliable and monthly band that coincides with OPEX carries the most weight. Subsequently, weekly OPEX bands are also more important. This important fact stems from institutional traders, such as pension funds and hedge funds, often use OPEX as a benchmark for initiating and closing positions. The “off number” is just a measurement of that outcome.

This dynamic is similar to the “hour of power”, which occurs when dealers begin to execute orders at the end of the trading day. Thus, resistance is measured from the “off number” to the highest point of the bar or candle, while support is measured from the “off number” to the low of the bar or candle. For easier measurement, use HCL bars instead of candlesticks. Both show the closing price, but to simplify process I use the HCL bars vs. candlesticks. I have to think twice when using candlesticks, it just adds to the number of steps I have to take. Either way, an HCL bar in combination with MotiveWave tools (I would appreciate if you decide to use MotiveWave please link my referral. It helps reduce my costs) provides the quickest process to use support and resistance bands. 

Technical Tip - Support & Resistance Bands

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