it was stated that support and resistance levels reverse roles only after a significant penetration. But what constitutes significant? There is quite a bit of subjectivity involved here in determining whether a penetration is significant or not.
As a benchmark, some chartists use a 3% penetration as a criteria, particularly for major support and resistance levels. Shorter term support and resistance areas would probably require a much smaller number, like 1%.
In reality, each analyst must decide for himself or herself what constitutes a significant penetration.
It’s important to remember, however, that support and resistance areas only reverse roles when the market moves far enough away to convince the market participants that they have made a mistake. The farther away the market moves, the more convinced they become.
This is one of the many passages and charts I find in books and articles on a daily basis. They span many disciplines, including:
- market trends (and, occasionally, history)
- emerging technologies and deep tech
- startups and venture capital
- corporate strategy and business dynamics
- product development and marketing
- finance and (mainly behavioral) economics
- cognitive psychology and neuroscience
- the future of work and career
I occasionally add a personal note to them.
The whole collection is available here.