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Arlen,
Just an idea I've had about stranght of supports and resistances, that I'd like to
share to see if anyone has tested anything similar.
> Is there different values of resistance and support
> (weak, strong, etc.)? Is there hard and fast rules in identifying
> these points?
I assume support and resistance levels are already graphically clear: to see if they are
likely to be "strong" or "weak" check the underlying's volatility. If rising expect the
price to go through the sup/res level. If volatility is falling, or anyway low, expect
the price to stop there.
Volatility may be measured with Bollinger's Band Width Indicator (distance between
Bollinger Bands divided 20 days SMA of the close), plus its 5 (to 9) days EMA. I
normally look at crossovers and extremely low levels measured as the indicator being
below one third of the BWI highest measure of the last year.
Alberto Torchio
Torino, Italy
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