Why does this work? I believe the expression of price is merely the collective decisions of many minds, and there exist psychological thresholds both absolute and relative in human behaviour, and in human thinking. These aspects are expressed in the buy and sell orders at certain levels. The chart below clearly shows to me the potential value of pivots and support/resistance. Bounces. Price Congestion (hesitation). Watching and Learning. Trading On.
Wednesday, August 10, 2011
Pivots | Support and Resistance | S&P500 1 Minute Chart (10-Aug-2011)
Trading is a fascinating discipline in so many different ways, and at so many different levels. I continue to marvel at the mental gymnastics required to be agile, particularly in a market with today's volatility. I believe that trading is by far the most incredibly stimulating mental exercise I have ever challenged myself with. There are no two days, minutes, instances in time that are EVER the same. The focus is often of looking for patterns and trends. For this, some people, including me, like to use pivots and support/resistance - they don't always work, but remain a good tool.