Support and Resistance

I am continually amazed at how accurately support and resistance levels play out during the day. I've highlighted yesterday's close (small dotted blue line) and yesterday's low (larger dotted blue line) to show you how many times price tested those areas throughout the day (the day isn't over yet).

The red arrows point out where price pulled back to resistance levels and the green arrows point out support. Using those level can provide excellent places to place protective stops (I usually place a stop just beyond the levels just to be safe).

I threw in an Elliott Wave pattern for the day as well. After some dumb-headed morning trades, I was able to make a few bucks with the Wave 5 trade. Notice how you could use several support levels if you took that Wave 5 trade.

You had the 20 and 50 moving averages and both yesterday's close and yesterday's low all providing support for the price. Over a 35 minute period nearly every one of those support levels was tested with yesterday's close providing the line that couldn't be crossed before we made a nice move up past the highs of the day.