Factors Affecting Support and Resistance Strength

Factors Affecting Support and Resistance Strength

• Support or Resistance's Length

The longer the time or the number of hits it got, the stronger it is. For example, a week's support or resistance creates a minor support or resistance, a month's support or resistance provides an intermediate level support or resistance, while 1 year's range will become a major / strong support or resistance. But you should keep in your mind that there is a point, where these levels are gradually become weaker when they get older. This is caused by fading people memories along with time.

• Support or Resistance's Height

The wider support and resistance zone, the stronger it is. A wide congestion zone between support and resistance acts like a higher barrier, and serves as a stronger level. The strength of this zone can be calculated by a percentage of current market value.

• Support or Resistance's Trading Volume

The higher the volume in a specific support and resistance zone, the stronger it is. A higher trading volume in a support or resistance zone, it means more traders involved in that zone. This scheme represents a stronger level of support or resistance area.