Skip to content
AmiBroker TA Course

Support, Resistance and Price Structure

Open any book, video or forum thread about charts and you will meet support and resistance within the first ten minutes. Levels, trendlines, breakouts, “the market is coiling” — this is the shared vocabulary of technical analysis, the part that everybody learns first and almost nobody examines.

That is precisely why it deserves a whole part of a course about evidence.

What this part is for

Section titled “What this part is for”

The ideas in Part 5 have three properties that make them dangerous to learn casually.

They are visually compelling. A chart with a horizontal line drawn across three old lows looks like proof. It is not proof; it is a picture of the past with a line on it. The line was placed where it was because you could already see the lows.

They are almost never stated precisely enough to be wrong. “Support held” and “support broke” between them cover every possible outcome, so the sentence “support tends to hold” survives any chart you show it. A claim that cannot fail is a claim that has told you nothing.

They are easy to convert into something testable — much easier than candlestick patterns or Elliott waves — once you accept a small number of arbitrary-looking decisions: how wide is a zone, how many bars define a swing, what counts as a touch, what counts as holding. This part is largely about making those decisions consciously, writing them down, and noticing how much the answer moves when you change them.

What changes for you

Section titled “What changes for you”

By the end of Part 5 you should find it uncomfortable to say “there is support at 47” without immediately wanting to add: support defined how, over what lookback, with what zone width, and compared with what.

Concretely, you will be able to:

  • state the support-and-resistance claim in a form that could be contradicted by data;
  • mark levels on a chart using a rule another person could apply and get the same result;
  • explain why an exact price line is a false precision, and choose a defensible zone width;
  • construct a trendline, and describe honestly how many free choices went into it;
  • write down six different definitions of “breakout” and show that they identify different days on the same chart;
  • measure consolidation with a number instead of an adjective;
  • design — not merely admire — a test of whether levels do anything.

The reality-check lesson that closes the part is a template. The same six steps reappear in Part 6 for RSI, in Part 7 for candlestick patterns and in Part 12 for volume breakouts. Learn the shape here and the later ones become familiar work rather than new work.

What you need first

Section titled “What you need first”

Part 5 sits at Level 1: it is about reading charts, not about programming. You should already have worked through:

  • Part 2, so that you know what is inside a bar and why adjusted and unadjusted history put old levels in different places;
  • Part 3, so that AmiBroker is installed, a daily database exists with a few years of history, and you know where the Formula Editor and the Analysis window are;
  • Part 4, especially the lessons on swing highs and lows and on market structure. Part 5 builds directly on the swing definitions introduced there.

You do not need to know AFL yet. Several lessons ship a complete formula so that you can see a level, a channel or a measurement drawn on your own data rather than described in prose. Paste them into the Formula Editor, apply them, and move the parameters around. Every line of them is explained properly in Parts 8 to 12; for now they are instruments, not exercises.

Everything here works with free end-of-day data and the trial or Standard edition of AmiBroker. Nothing in this part requires the Professional edition or a live feed.

Part5 of 36Level1 — Chart ReaderPages6Estimated time2.9 hours

0 / 6 lessons in this part completed