Support & Resistance Does Not Work For Me!

I Focus On Momentum

I think in this business everything and anything works but the real edge lies in knowing what does work and what does not. For us it is very important to know something similar to life in general, I guess. Because to some extent this helps in having mind clarity too.

Now, support and resistance are price levels that act as potential floors (support) and ceilings (resistance) for a stock's price movement. Support levels are areas where buying interest is expected to be strong enough to prevent further price declines, while resistance levels are areas where selling pressure is anticipated to halt upward price movement. These levels are identified by analyzing historical price data. And with charts lets understand this concept.

In the above image the basic interpretation is done like this and mind you support, and resistance can be dynamic, and its interpretation varies person to person just as shown in below image and hence using trend line therefore there is no right or wrong way per say. As it varies based on consideration of time period, or tools like trend line or zones too etc.

Just because of the multiple interpretation of the same concept and which don’t have a rigid rule or defined precise statement to it is a big problem hence trading based on this concept is not ideal because doing this you get random results because your definition of support and resistance itself is random in nature to a very large extent.

This concept is used in multiple ways but one popular way that I know of is, for example, avoiding this XYZ stock because it has overhead supply. This is also why most swing traders use 52wk as a filter in their scan. The words like overhead supply which is nothing but resistance and many more random so-called fancy words by so-called trading gurus which are all pointing towards support and resistance.

In the above image can we say the blue lines that are drawn are resistance? Answer should be yes. If not then you have not understood the concept in the first place.

Now in above image why did the stock not stop or reverse at any resistance level let’s say its did not respect any resistance level which happens over and over again across stocks and across time period and also same thing you can observe on support side that the stocks don’t respect supports and continue to fall that is mainly because of momentum. If the stock is in momentum, it does not care about any support or resistance and just moves in that direction be it on upside or downside till the momentum persists. Now don’t you think it’s better to bet your money in stocks that have momentum then thinking about or let’s say betting on so called support and resistance.

So, I think support and resistance is an imaginary zone or points or whatever you want to call it which has zero significance for my trading even though it’s a structural tendency because the structural tendency that I have based my whole trading is on momentum which in my opinion is far superior then support and resistance.

Summary,

• Can you trade using support and resistance? Yes. Personally, I don't care about it.

• The concept of support and resistance as a whole don’t have a clear, specific and detailed definition of it unlike momentum across any timeframe.

• I have never come across a trader who has made it big using support and resistance yet. And most of the high profit factor systems are based on momentum.

• Momentum as a structural tendency is much better than the concept of support and resistance.

• Support and resistance only looks good on social media and in hindsight in my opinion.

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