{"id":4739,"date":"2010-12-05T06:00:48","date_gmt":"2010-12-05T10:00:48","guid":{"rendered":"http:\/\/club.ino.com\/trading\/?p=4739"},"modified":"2010-12-03T16:37:13","modified_gmt":"2010-12-03T20:37:13","slug":"how-to-determine-where-the-real-support-and-resistance-is-everyday","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2010\/12\/how-to-determine-where-the-real-support-and-resistance-is-everyday\/","title":{"rendered":"How to Determine Where the Real Support and Resistance is Everyday"},"content":{"rendered":"

\"\"Larry Levin is no novice to the markets, in fact he's a pretty well-known by traders worldwide. We've asked Larry to give Trader's Blog readers some tips he uses to find daily support and resistance levels and he gladly agreed. Be sure to comment and let us know what you think and some things you use to find key market levels.<\/p>\n

---------------------------------------------------------------------------------------------------------------------------------------------------<\/p>\n

Secret Trading Tip #29 <\/strong>
\nFrom the Desk of S&P Trader Larry Levin, President of Trading Advantage LLC<\/em><\/p>\n

How to Determine Where the Real Support and Resistance is Everyday<\/strong><\/p>\n

Understanding support and resistance levels is an extremely important skill in any market, and it's absolutely critical if you plan on trading the S&P and NASDAQ E-Mini markets. Professional floor traders are aware of an entire range of major and minor support and resistance levels before the market opens each day. They also know how to calculate new levels as the trading day progresses.<\/p>\n

Knowing where the market may turn gives you an effective road map to guide you through the day.<\/p>\n

Most traders calculate support and resistance levels incorrectly, and to make their job even harder, they generally don't know how to trade around them. Many traders will use an old high or an old low and assume they've found support or resistance. That just doesn't work. Think about it for a moment. If the market always stopped at old highs we could never have an up trending market, and if the market always stopped at old lows we couldn't have a down trending market.<\/p>\n

These Are the Same Numbers I (And Other Pro Traders) Use Every Morning<\/p>\n

The technique I discuss below is broken down into specific support and resistance numbers that I provide in my daily report. These are the same numbers I and many other floor traders utilize each morning. Can you imagine the \"edge\" this information gives you over the average trader?<\/p>\n

Let's face it; we all want to catch the big trending days, days when the S&P moves 15 or 20 points without looking back. Unfortunately those big trending days just don't happen that often. Most days the market doesn't trend very much in either direction, instead it will move between known support and resistance levels.<\/p>\n

Knowing the location of these price levels is important, but knowing how to trade around them can be the difference between success and failure.<\/p>\n

One of the simplest ways to do technical analysis is by using the pivot points. This method has been around for years and is described below:<\/p>\n

A pivot point is approximately the center of today's price range . From there, I calculate three different sets of highs and lows.<\/p>\n

These pivots are then potential support and resistance, when prices have gone outside the Value Area.<\/p>\n

Pivot Point = (High + Low + Close) \/3<\/p>\n