2007issue C081-3
A case study in support, resistance, and trendline role reversal on currency charts
A historical currency-chart workflow defines Support and resistance or a Trendline from price structure, treats the next event as either a fade of the bounce or Breakout confirmation, and then checks whether the broken line is tested from the other side.
- Draw an uptrend support Trendline through at least two rising lows and a downtrend resistance Trendline through at least two falling highs, and treat three or more aligned touches as stronger confirmation.
- Draw horizontal Support and resistance across repeated highs or lows. After a breach, a valid level is expected to be tested from both sides, so the line can reverse role.
- At a critical line, fading a bounce and trading Breakout confirmation are opposite in direction and philosophy.
- Daily euro-dollar, pound-dollar, and dollar-yen charts show broken trendlines and a broken double high later acting from the opposite side.
Define the line from price structure
The historical workflow starts by defining Support and resistance from price structure. Horizontal lines are drawn across repeated highs or lows. An uptrend support Trendline is drawn through at least two rising lows. A downtrend resistance Trendline is drawn through at least two falling highs. Three or more aligned touches are treated as stronger confirmation.
Fade the bounce or trade the break
At a critical Support and resistance line a trader can fade a bounce or trade Breakout confirmation. Those two paths are opposite in direction and philosophy.
Expect a test from the other side
A valid Support and resistance level is expected to be tested from both sides after a breach. Former support can act as resistance, and former resistance can act as support. Horizontal levels can also reverse role after a break.
Daily euro-dollar
On a daily euro-dollar chart, a downtrend resistance line with three precise touches later flipped to support after Breakout confirmation and then marked a sharp reversal. The same chart also shows a broken uptrend support line later acting as resistance while the broader uptrend continued.
Daily pound-dollar
On a daily pound-dollar chart, a horizontal double-high that later broke was retested as support. An intermediate uptrend line with at least five support touches later acted as resistance after breakdown.
Daily dollar-yen
On a daily dollar-yen chart, an uptrend support line with four touches broke down and was then retested from below as resistance with about four more touches.
All readings on this track · 53 readings
- 1984Constructing the slow stochastic from a five-session range
- 1985Gold-proxy trendlines and a January support base
- 1988Construct a five-week new-highs total as a breadth chart
- 1988Stacked channel, trendline, and moving-average warnings in 1987
- 1989Auditing fifth-wave counts with equality, Fibonacci, and trendlines
- 1990Money-fund maturity as a companion Eurodollar chart
- 1990Constructing wave targets from ratios, triangles and trendlines
- 1992Nested time frames for trend and channel signals
- 1992A pre-trade checklist for trendline breaks and loss limits
- 1992Bond-fund timing inside trendlines, retracements, and dual averages
- 1992Two-point trendline construction from rise over run
- 1993Disposable chart ratings from confirmed level tests
- 1993When trend channels define fair value after dislocations
- 1993Valid trendline anchors for three-part reversals
- 1994Pairing stochastic divergence with trendline invalidation
- 1995Constructing measured targets after trendline breaks
- 1997A three-part pullback plan with RSI, Fibonacci retracements, and a tight trendline
- 1998Rule-based Trendline construction for testable entries
- 2000Constructing trendlines, breaks, and role reversal
- 2000Constructing speed resistance lines from trend extremes
- 2000Nasdaq tech cycle stages with a 15-day average and trendlines
- 2002Two-session candlesticks that test support, resistance, and trendlines
- 2002Constructing Fibonacci ratio grids from a peak and a trough
- 2002Evaluate trendline geometry before trusting a breakout
- 2002Trendline, volume, and breakout hypotheses versus cycle-end stories
- 2003Writing the long S&P 500 trendline and cycle junction as one hypothesis
- 2003A three-event trendline reversal checklist
- 2003Reverse-engineered Relative Strength Index price curves
- 2003Two-anchor trendline construction without cut-through
- 2004Treat a 15-minute e-mini stair-step as congestion under a daily lid
- 2005A 50-day average, a trendline break, and an open barrier flip
- 2005Matching a forty-day average to a crude trendline
- 2006Constructing a relative spread-strength oscillator for staged cycle confirmation
- 2006Constructing a log-change probability line for trend and range rules
- 2007Linked cross breaks as dollar-pair filters
- 2007A case study in support, resistance, and trendline role reversal on currency charts
- 2007Reading trendline breaks in a housing-sector case
- 2007Constructing replaceable trendlines for break signals
- 2007Reading trendline breaks before the mechanical signal
- 2007Trading choppy forex trends with channels and Fibonacci breaks
- 2007A stacked hypothesis from wave, trendline, ratio, and candle
- 2008Exit rules before entry: trendline, support, and stops
- 2008Capitulation headlines need trend confirmation
- 2008RSI divergence classes, ratio thresholds, and trendline tests
- 2010Support and resistance as falsifiable chart hypotheses
- 2012Reading a 2012 software directory as a breakout and channel case study
- 2013Treat a currency position as a regime, then map shared levels
- 2014Evaluating trendline swing size per market
- 2018Intermarket regime stress and the January 2018 trendline break
- 2018Weekly and daily Stochastic oscillator construction on a single daily chart
- 2018Constructing trendlines, support, and breakout targets from crowd exits
- 2019Trendline break and Fibonacci retracement as a falsifiable outlook check
- 2019Monthly S&P 500 false-break versus the decade trendline