Ready to get confused? I'm horrible at explaining things. :)
Support is the price level at which demand is thought to be strong enough to prevent the price from declining further. Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further.
Currently on this chart: The red lines indicate the areas of resistance and the green line indicates levels of support.
NOTE: At this point... As we pass above a red resistance line it will change from red to green or from resistance to support.
Just like when we dropped below that 4 dollar area, a support line at the time (green), changed from green to red or from support to resistance.
example: In March, when ES was bouncing between 4 and 5.25 a share, (far left side of the chart) the line at four dollars was actually green (support) back then, and it turned to red only once the PPS went below that price.
(Meaning Once you break support it becomes resistance and vise versa)
ES found support at 2.95 from May to June, but then reported a horrible Q and tanked in one big Move.
Now we sit at an area where a gap, and a horrible day, created such a spread between resistance lines and supports lines
resist. 2.95 supp 1.65
that we are pretty open to a rise without being obstructed by resistance. Our next resistance line is at 2.95 with nothing in between to obstruct us right now.
However - NOTE: That doesn't mean we can't create a new resistance line in between here and there...but right now it looks pretty good. Knock on wood. :)
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