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Support / Resistance Levels


You can add this indicator to the chart by clicking "Support" button on the right part of the Indicator Panel.

So, what is the SUPPORT and RESISTANCE lines? Think of it like this: 

Market makers are like bouncers at a club. At RESISTANCES, they're trying to keep the price from going up too high. At SUPPORTS, they're trying to keep it from going down too low. If enough pressure builds up, these walls can break, leading to significant price movements.

RESISTANCE (Call Walls)

Think of a call wall like a ceiling in the market. It's a level where there are many call options contracts at the same strike price. Market makers who sold these calls typically need to hedge by buying the underlying asset (like stocks) as the price approaches this level. They often try to prevent the price from going above this level to avoid their options becoming too valuable.

Example:

  • Let's say there's a large call wall at $100
  • As the stock price approaches $100, market makers might try to sell shares to create selling pressure
  • This can make it harder for the price to break above $100

That's why it is called RESISTANCE.

SUPPORT (Put Walls)

The SUPPORT is like a floor in the market. It's a level where there are many put options contracts at the same strike price. Market makers who sell these puts hedge by selling the underlying asset as the price approaches this level. They often try to prevent the price from faling below this level.

Let’s analyze chart above:

We have ticker $AAPL, which is in an upward trend:

  • trendsAIv0 model shows us the BUY signal at the price $242.65
  • the previous RESISTANCE line near 240$ was broken. 
  • New SUPPORT is at 247.50$ line
  • New RESISTANCE is at 253.50$ line. 
  • The current price is almost at the RESISTANCE line also. 

Now is a good time to apply rules of the risk management, and move the stop-losses to the entry point of the trade. We can do it he SUPPORT line was updated and the possibility of the price reaching the entry point diminished.

FAQ 

  • Is this Indicator applicable for use on small-cap stocks and contracts?
The higher the liquidity, the more precise this indicator becomes. The optimal amount of the contracts, calculated by the tradevision.io team, equals 5 million open contracts.
  • Indicator gives me flipped SUPPORT and RESISTANCE lines. 
Such behavior can be found in low-capitalization stocks when the contracts amount experiences fast drop or increase in value. We understand that this view can be confusing. You can still use this as an indicator for the institutional market position that creates increased volatility chance.

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