What are support and resistance?
A channel is 2 trend lines that hold price between them. The lower line marks where buyers stepped in before; traders call it support. The upper line marks where sellers took over; that is resistance.
These 2 labels flag price coming back to one of those lines.
Illustrative, made-up prices: a flat range. A close in the orange band reads Support; a close in the purple band reads Rejection. Each band is as deep as your distance setting, and the midpoint keeps them apart.
When does a close read Support?
- It is above the channel’s lower line.
- It is within your distance setting of that line.
- It is in the lower half of the channel.
- It has not closed above the upper line. That would be a Breakout.
There is no minimum gap: a close just above the line counts. Support applies to rising, falling and flat channels, triangles, widening patterns and a lone rising support line.
When does a close read Rejection?
- It is more than 0.1% below the upper line, and within your distance setting.
- It is in the upper half of the channel, above the lower line.
- The pattern is a flat range, a falling channel, a triangle whose upper line falls, or a widening pattern.
Rising channels, and triangles with a flat top over a rising bottom, do not get a rejection label. Rejection also covers a failed breakout: a close back under the upper line after a close above it.
What if a close is near both lines?
In a narrow channel, a wide setting could reach from one line almost to the other. The midpoint settles it. In the lower half only Support can apply; in the upper half only Rejection. A close exactly on the midpoint goes to Support.
How does the distance setting change the list?
One setting in Signal filters covers all 4 labels: 2%, 4%, 8% or 15%, or a custom value up to 20%. A tight setting shows only closes right at the line. A wide one also keeps closes that have started to move away.
With a signal filter on, the Δ% column shows each row’s distance from its line. Sort it to bring the closest tests to the top.
If a stock carries more than one signal, its row shows the freshest: the line price crossed or touched most recently, then the one closest to price.
What to check before you read much into it
- History: how often has this line held? A line drawn through 2 points has less behind it.
- Channel: is it the MAJOR channel, the longest live one? The channel overlay shows this on stocks in your own lists.
- Slope: Support on a rising line sits inside an uptrend. On a falling line it is a bounce inside a downtrend.
- Next close: Support that turns into a Breakdown, or Rejection that turns into a Breakout, means the line did not hold.
- Results: an earnings date can move price through a line in one session.
Limits worth knowing
Both are mechanical labels from a published rule: live price during the session, the close after it. Lines are drawn on past prices and can be drawn poorly or missed. Lines break all the time.
Chart in Motion does not make buy, sell or hold calls. Support is not a reason to buy, and Rejection is not a reason to sell.
See it in the app
Support rows show in orange and Rejection rows in purple. Choose either in Signal filters, sort by Δ% and open a stock to see the line being tested. More on the features page.