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2000issue C051-4

Constructing speed resistance lines from trend extremes

Construct speed resistance lines from a completed swing by trisecting the vertical price span and fanning two lines from the origin. TradersWeek editorial interpretation: each fan is a timed support or resistance test confirmed only after two consecutive closes.

  • A completed swing is connected from major low to major high, the later vertical span is trisected, and two fans are drawn from the origin through the one-third and two-thirds marks.
  • Unlike ordinary trendlines that sit above or below price, speed lines run through the price field and encode both time and price change.
  • In an advance the two-thirds speed line is the first expected pause; a confirmed break points toward the one-third speed line, then toward the origin.
  • A speed-line break is confirmed only after two consecutive closes beyond the line, after which a recovered line can reverse from support to resistance.
Entries in this reading3 entries
Fibonacci retracement97 readingsCurrent trackTrendline128 readingsSupport and resistance170 readings

Construction from a completed swing

Speed resistance lines are constructed from a completed swing. Connect the major low and the major high, drop a vertical from the later extreme back to the earlier extreme's price, trisect that vertical, and fan two lines from the origin through the one-third and two-thirds marks.

Anchors are the extreme intraday high or low of the swing, not the closing print. The major low starts an advance and anchors every uptrend speed line. The major high starts a decline and anchors every downtrend speed line.

Each new swing high in an advance, or new swing low in a decline, requires a fresh pair of speed lines because the measured rate of the trend has changed.

Time and price on the same line

Unlike ordinary trendlines, which sit above or below price, speed lines are drawn through the price field so they encode both time and price change. A speed resistance line combines a trendline with fractional retracement levels.

How an advance is read

In an advance, the first expected pause is the two-thirds speed line, the shallower fan that corresponds to a one-third retracement. A break of that line points toward the one-third speed line, the steeper fan used as the second support once the shallower line has failed. A break of the lower line points back toward the origin of the trend or below.

How a decline is read

In a decline, a close above the lower speed line implies a possible rally to the higher line. A close through the higher line implies a possible return to the start of the decline. The two-thirds speed line is the first resistance. The one-third speed line is the second resistance once the shallower line has failed.

Cisco Systems daily prices with three speed-resistance fans

Daily Cisco candles from late October 1999 through late February 2000 rise from about 67 to a mid-February peak near 138, then ease. Three fans from the late-October low near 66 climb toward 143, 119 and 92. Price stays above the middle fan until a late-January dip, then rides the upper two-thirds fan into the high. Values were read from the plotted chart, not from a table.
Daily Cisco candles from late October 1999 through late February 2000 rise from about 67 to a mid-February peak near 138, then ease. Three fans from the late-October low near 66 climb toward 143, 119 and 92. Price stays above the middle fan until a late-January dip, then rides the upper two-thirds fan into the high. Values were read from the plotted chart, not from a table.Cisco Systems · daily · 1999-10-18T00:00:00.000Z to 2000-02-22T00:00:00.000Z

Digitized from the OHLC chart. Closes are approximate to about 1 point; the three fans are the construction overlays, not traded prices.

Two-day confirmation and role reversal

A speed-line break is treated as confirmed only after two consecutive closes beyond the line, not after a single intra-bar penetration. That two-day close confirmation is the rule for each fan.

Once the two-thirds line is broken and later recovered, that former support becomes resistance. The same polarity flip applies in reverse during a decline. That shift is role reversal.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
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