Support Resistance S / R

Alchemy JOe explains how S /R are calculated

https://www.tradestation.com/Discussions/Topic.aspx?Topic_ID=8863
Dear Future Trader,
Thanks for your inquiry. The resistance levels R1, R2 and R3 as well as the support levels S1, S2 and S3 are calculated based on a standard Floor Traders Pivots calculation that uses the
1) previous sessions high/low/close AVERAGE => (H+L+C )/3 ( notice no OPEN )
2) the previous sessions high and the
3) previous sessions low.

For daily pivots, the previous session is based on the previous days' high, low and close whereas for weekly pivots, the previous session is based on the previous weeks' high, low and close.
Please let me know if I can help you with any other questions.
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asr note: HIghTower Report , QuantLogic , Alchemy all of them may be using the same S /R formula as below .
- Even if they use some small variation , it does not matter becuase there may be only samll 10 to 20 cent difference for crude OIL price S1/S2 R1/R2 which does not matter much . All what matters is do you want to take trade postion at this S/R levels based on fundamental news of that day .

- Alchemy rolling pivot points ( hourly ) must also be based on this same formula except they were taken previous HOUR H/L/C
http://www.tradingalchemy.com/ViewChartsRollingFTPivots.htm

- It seems time window is param, we can change with input 60 min or 30 min etc.
https://www.tradestation.com/Discussions/Topic.aspx?Topic_ID=8854

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The calculation for the new day are calculated from the High (H), low (L) and close (C) of the previous day.


Pivot point = P = (H + L + C)/3

First area of resistance = R1 = 2P - L
First area of support = S1 = 2P - H
Second area of resistance = R2 = (P -S1) + R1
Second area of support = S2 = P - (R2 - S1)

As prices continually rotate to enhance trading, prices of perceived value (support) and perceived over valuation (resistance) can be recognized by the volume of activity at different price levels. This is the basis of Market ProfileTM (MP) analysis. Distinct patterns of volume and price behaviour can be recognized using MP profiles.

MP illustrates that the majority of trading in a day is by floor traders or "locals" as they are called. These locals constantly take prices up and down to very short term levels of support and resistance, exploring the narrow limits of price/valuation tolerance. Trading for the day will persist between this narrow range unless "outside" buyers and sellers are attracted to the price changes that occur. If the narrow range of support or resistance established by the floor traders can be wrestled from them, then off floor short term traders will be attracted and enter the market, as buyers if short term resistance is overcome or as sellers if short term support is violated. These breakout points then usually reverse their function and serve as test points, i.e. previous resistance becomes support and previous support becomes resistance.

Now the active range of trading expands as the off floor traders enter the fray. If more longer established support and resistance can be successfully breached during the new short term trend that emerges, with the activity of the off floor traders, then longer term traders, position traders, with an intermediate or long term intention of their market commitment will be attracted to join the market.