Skip to main content
Track Trailing stop
10 / 36
Search the archiveLibrary
Library

1999issue C071-4

Constructing common-number support and resistance

Support and resistance are constructed by marking levels on several participant time frames and keeping only the shared prices, called common numbers. The historical workflow then places a stop-loss a few ticks beyond the active number and advances a trailing stop toward the next number.

  • Support is a temporary fair-value price where buying can halt a decline; resistance is the matching area where selling can halt a rally.
  • Static grids, drawn trendlines, and moving averages are treated as unreliable because they do not update with changing economic pressure.
  • Common numbers are the support and resistance prices that recur across the selected time-frame segments.
  • A stop-loss sits a few ticks beyond the active common number, and a trailing stop advances toward the next number as the first objective.
Entries in this reading3 entries
Current trackTrailing stop87 readingsStop-loss order144 readingsSupport and resistance170 readings

Support and resistance as temporary fair value

Support is constructed as a temporary fair-value price where buyers can absorb selling and halt a decline. Resistance is the matching area where sellers can absorb buying and halt a rally. The paired support-resistance map is built so a repeatable chart condition can be turned into a testable entry, invalidation, and target.

Why static constructions are treated as unreliable

Constructions that treat the market as static and linear are treated as unreliable. Fixed-ratio grids, drawn trendlines, moving averages, and similar fixed-interval inputs do not update with changing economic pressure on price.

Building common numbers from time-frame segments

The construction procedure segments participants by chart time frame. Each selected interval is a time-frame segment that stands in for one group of participants. Support and resistance are marked on each selected interval. Only the shared prices are kept. Those shared prices are called common numbers.

Choosing time-frame segments

Time-frame choice is market-specific. A venue dominated by daytraders can be represented with intraday bars. Other markets require testing to find intervals that fairly represent their participants.

For the S&P 500, a participant set of 1-, 10-, 30-, and 45-minute charts plus the daily chart was used. A 10-minute chart was treated as already containing the patterns of nearby 5-, 7-, and 15-minute traders.

The count of common numbers that matter depends on a market's internal dynamics. For S&P daytrading the map was typically four prices.

One common number across several charts

In the March 1999 S&P 500 futures example, one common-number line acted as repeated support and resistance on the 1-minute chart. On the 10-minute chart it was prior resistance that failed on 6 January. It was a key level on the 30-minute chart, and it was the boundary of a four-day range on the daily chart after that breakout.

Daily March 1999 S&P range around the 1261 common number

Daily high and low of the March 1999 S&P 500 futures (DSP9H) from 21 December 1998 through 12 January 1999. Highs stall at 1261 on 4–5 January; after the 6 January breakout the next four sessions hold above that line; 12 January cuts back through it. Highs, lows and the horizontal common-number line are read from the published daily bar chart.
Daily high and low of the March 1999 S&P 500 futures (DSP9H) from 21 December 1998 through 12 January 1999. Highs stall at 1261 on 4–5 January; after the 6 January breakout the next four sessions hold above that line; 12 January cuts back through it. Highs, lows and the horizontal common-number line are read from the published daily bar chart.S&P 500 March 1999 futures (DSP9H) · Daily · 1998-12-21T00:00:00.000Z to 1999-01-12T00:00:00.000Z

Each day's high and low are read from the printed high-low bars against a 10-point price scale, so values are whole index points with about a one- to two-point reading tolerance. The 1261 line is the author's drawn common number, not a stated print value.

Stop-loss and trailing stop on the same map

A stop-loss for a trade taken at a common number is placed a few ticks on the far side of that number. If the number is taken out, the next higher or lower common number is treated as the expected destination.

The next common number is used as the first objective. A trailing stop is advanced as price approaches that objective so remaining exposure stays bounded if the move stalls. The destination number can also start an opposite position.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
10 of 36 in the Trailing stop track
20011-6 pp.Next on Trailing stopFour-step opening-hour bias and trailing stopsA directional day filter classifies the session from the first 60 to 80 minutes so later orders stay on the side implied by whether that window captured the day's high or the day's low.
All readings on this track · 36 readings
  1. 1988Half-day bars, a midpoint gate, and a bar-based trail
  2. 1989Packaging two-bar reversals into testable entry and exit rules
  3. 1989Weekly high and low averages as stop-and-reverse levels
  4. 1991Constant false-alarm rate for dominant-cycle stops
  5. 1992Tick-index extremes as continuation and turn hypotheses
  6. 1993Constructing layered stops from equity and structure
  7. 1993Filter crossovers with moving-average slope
  8. 1993Precommit stop bounds from equity and structure
  9. 1998Evaluating a trendline barrier that can only tighten a capped stop
  10. 1999Constructing common-number support and resistance
  11. 2001Four-step opening-hour bias and trailing stops
  12. 2004Make the trading system the star
  13. 2005A beginner stock case: stop, trail, and the pre-trade checklist
  14. 2006Sell stops that trail support after the buy
  15. 2006Treat a wave-3 label as unfunded until the stop rails are written
  16. 2008Test medium-term divergence with a trendline break and a trailing stop
  17. 2010Rule-based forex entry, stop and trail
  18. 2012Precommitting stops when one currency range templates another
  19. 2012Cat-ears as a downtrend continuation hypothesis
  20. 2013Three-average swing entry and a trailing average exit
  21. 2014Construct a dual quotient-copy trend filter under a frequency roof
  22. 2014Stop distance, size, and trailing swing invalidation
  23. 2014Long-only RSI pullback, reversal-bar-entry, and staged-trail construction
  24. 2015Dual-average regime, trigger candle, and trail as one daily script
  25. 2015Three-gate trend system: filter, trigger, and trailing stop
  26. 2016Construct HHLLS crossover and breakout entry rules
  27. 2017An appointment-trade around a scheduled political close
  28. 2017Golden-cross breakout rules for a swing entry
  29. 2017Breakout confirmation above round numbers, with nines as sell shelves
  30. 2018Classify diamond geometry before the breakout
  31. 2019When trails and stops betray the support read
  32. 2019One-triggers-the-other pairs for preplanned swing entries
  33. 2019One-triggers-the-other orders for a breakout and its stop
  34. 2019When the second decision unbounds planned risk
  35. 2020Last-Hour Breakout With a Same-Session Flatten
  36. 2020Couple the slow period to stop-loss and trailing-stop settings
By fieldTrend and channels181 readingsBy year199959 readings
All 87 readings tagged Trailing stop
Also on Trailing stop5 readings
1993Precommit stop bounds from equity and structure2006Sell stops that trail support after the buy2019When trails and stops betray the support read1986The stop, the size, and the acceptable loss as one pre-entry gate1991Set the first stop from a capital-scaled MAE histogram