What you will learn
- Support and resistance hypotheses
- Prior session extremes
- Round numbers
- Level width and uncertainty
Support and resistance hypotheses
Support and resistance are hypotheses about behavior near a reference area. A line does not prove resting liquidity or guarantee a reversal. Record how the area was chosen and what observation would weaken the hypothesis.
Prior session extremes
Prior-session extremes are reproducible only when the session and price stream are defined. A different timezone or bid/ask convention can alter the level. Preserve those definitions with the chart annotation.
Round numbers
Round numbers can be convenient reference points, but visual prominence does not establish predictive value. A research rule should specify the rounding increment and count all qualifying interactions, including those with no meaningful response.
Level width and uncertainty
Treat levels as areas with uncertainty rather than infinitely precise barriers. Width can be defined in price units or by a documented scale measure. Test whether conclusions survive reasonable changes in the width.
Worked example
A rule marks the prior session high with a tolerance of 0.5 price units. A price 0.4 above it is inside the area; a price 0.8 above is outside. This classification does not by itself determine whether to trade.
Try it yourself
Specify a level-selection rule, width and invalidation condition, then explain why the line alone is not an entry signal.
Show the worked solution
The response should state observable construction and a condition that contradicts the idea. Entry still needs a trigger, cost assumptions and risk plan. A level is contextual information, not a complete trading system.
Apply this to your course project
Annotate a fixed sample using written swing and break rules, including ambiguous examples.
Keep the calculation inputs, assumptions and decisions with your work. Practical exercises are self-reviewed; the scored knowledge checks assess the questions shown, not an independent certification of practical competence.