ok, I posted a visual of what I'm talking about in the forum on 'reading charts'

discussing "support" and "resistance" needs to include
"strength of gradient". The zone of support or resistance is a
gradient of pressure, the strength of that gradient is determined by the length
of price consolidation.

what the hell am I talking about. Okay - consider this:

viewing a support level as a zone, as the stock price penetrates the zone in a
move downward, the strength of that support thins out as if buyers are
repeatedly tested. What is "support" anyway - price points where
buyers step in. If stock is repeatedly offered at those sale prices, the buyers'
firepower will be exhausted. This of course is why a red flag is raised when a
stock breaks down through a consolidation zone.

E.g.: Stock price drops to top of support zone. Buyers step in, strong support.
A few more days of lower movement with high volume. Stock price is moving
further into the zone of support where support is weaker, acceleration of move
becomes more probable. Buyers getting tired. Stock breaks through bottom of
support zone. Red Flag! Barrel over Niagra Falls! lol

or as in wmt. their new resistance level is 59 and some change it wants to see
60 but is having a hard time, which for that stock, that are at new highs all
together, will it go further, probably yes. will it stay there considering the
economy, yes , till the economy gets better, then it will go back to its trading
range of 39-44 $. almost the same thing with mcd.don't own either...chris

another thing: don't fall into a trap of thinking whereby "resistance"
is a specific price point. "Resistance" (or on the other side of the
coin, "support") is typically a zone - a price range. From that
perspective: a prior high with no surrounding consolidation is much less
resistance than a prior high accompanied by days of consolidation.

how far back? it depends. If the stock goes into lockbox, a 10 year monthly
deserves a look. Xavier and I started talking about JNJ here over a month ago
(see answers\52073); take a look at the JNJ chart in the forums: a breakout from
a 3 year trading range.

If I am day trading, a daily and weekly view often yields a set of stocks to
watch. Then during the trading session I will watch a 1 minute real time graph.

Prior high becomes resistance level? Sometimes.