Video 3: How to draw support and resistance levels

How to draw support and resistance levels

This is Paul Wett with www.WettTraderLLC.com here to teach you and show you how to draw support and resistance levels. (Folks, you need to learn this) Support and resistance levels. I’m gonna teach you how to draw support and resistance levels using www.WettTraderLLC.com and then I will show you how you can make some money with these support and resistance levels. My software www.WettTraderLLC.com has our daily, weekly, and monthly support and resistance levels. They usually call these pivot numbers, pivot letters. If you’re visual like a lot of people are, support and resistance levels, I usually start out horizontally right here. I start horizontally because that is a very very very good. I’ll show you folks.

So, a good way to see what’s really going on. If you draw these lines, I draw them horizontally; I’m trying to get really close. Now when I draw these horizontal lines, I’m looking for levels of support and resistance they could be off just a few, they’re not gonna be perfect when I draw my horizontal lines. But what it’s telling me right through here, I have a hard time maintaining a close at this 1861 area. Okay? Now you’ll need to plus or minus a few points right? And same thing here, this is my resistance right here, I hit this line right around my 1908 area; we came back down. We hit this area again, came back down. We hit this area again, came back down. Here we hit the area, we broke out, okay? And then look what happens, we retested them; once you break out of the resistance area, so if you’re over head, if you’re trading here, this is resistance. Once you break out through the resistance area that resistance should now be considered support and if the market doesn’t hold that area, the market doesn’t hold that support area; that should tell you something folks, that should tell you something. That now will become resistance again, look at that. We came down, boom, it was resistance again, came back down again to our next area of support; right through. Now this is a big range folks, it’s almost 50 points, it’s a $2500 in the S&P 500 E-minis $2500. So this is my support and resistance levels, when I draw my horizontal lines.

Now, you can also draw diagonal lines obviously. A lot of people try to identify the support and resistance by drawing significant high and lows. Significant highs (they draw); resistance, support. Once again, this is a longer time frame, this area is telling me that we’ve got a support here. We’ve hit this level; October, August, and in January (December here). We cannot close below 1843. We did make a lower low though, so that’s a word of caution. So your trendlines can be support and resistance levels, your moving averages; these are your moving averages, this is my 40 bar moving average, my 18 bar moving average; those could be support and resistance levels. I’ll show you a real real good, if I can pull the data, I’m not sure that I’m gonna have enough. A 200 day moving average is a really good line, there goes the horizontal line. See, this is easy. You know when you’re in this range, support and resistance, once we back up through here, once we back up through here, I don’t think we have enough, this is the 60 minute. So this is a good area of support and resistance through here. So support and resistance levels in www.WettTraderLLC.com You can find them on any timeframe, this is the timeframe. You could clearly see some support and resistance areas here. We also use the pivot numbers on support and resistance areas, and I’ll show you what I’m talking about and this is for you data guys. You data guys, your support and your resistance are gonna be your R and your S. S are your support areas. So even if you are on a downtrend and you wanna find out where to take profits and maximize the trade. This is a good area to reduce risk by cashing on some of the chips. I always tell the folks with www.WettTraderLLC.com we could key off the PP all day long with the trend.

This is my support level, this is my resistance area.  We have them on every time frame. We key off this area folks, I’m telling you. The PP is neutral right? So last week’s PP is 1904. So if you are trading on that area would be a good trade because I know that if I sold 1904, my next level of support will be 1876. If I bought 1904 my next level will be resistance, would be 1951; and the greatest thing about that is once you get that data and you know that, when you get your PP which is your average, and you close plus or minus 3 to 5 points and your support level plus or minus 3 to 5 points from the previous low and your resistance level is plus or minus. What that tells you is you have a high probability that you gonna go to the next resistance level or the next support level. So what that means folks is we’re looking for a breakout to the next level and then once we break out this 1804 level or 1808 level; 1804 here, that’s gonna be support now but once we break it, it’s gonna be resistance and as you can see here we’re looking to get another; we’re looking for a 5 bar low in at our monthly chart. So we went low, high; low.

So we’ll see what happens with that but like what I said folks, trading with WettTraderLLC.com all you have to do; half of your moving averages are gonna be your support  levels as well and this is where the software keys off the trades. So your moving averages is well of support and resistance. Your moving averages are plus or minus 3 to 5 points turn on from the PP. Turn it on, make a trade and then you can try to run it between your support level which is R1. So you want to either buy the PP to R1, or sell the PP to S1, that’s a good trade; or if R is your resistance and you sell R1, you can flatten one position at PP; flatten another position at S1 because that will be your next level of support. So that’s a quick lesson on support and resistance levels; how to draw them, how to use them with www.WettTraderLLC.com Sign Up for a FREE Demo. www.WettTraderLLC.com