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Important Prices Are Almost Always Tested
As you will see in a moment Emini Futures prices tend to stop and reverse several times at or around the same price level. Why is that? What is it that makes a particular price important? Is it a secret formula discovered by men with names like Fibonacci, Bollinger, or Wilder? Perhaps...
Or, did they discover something more about the nature of man vs. the nature of numbers?
I've worked with formulas, ancient alchemy, and even burned a little sage in search of the answer. Right or wrong, here's my opinion...
After the build up this may sound a little mundane. We know a price is important because it gets "tested". Can we know it's important before the test? hmmmm...
It does seem a bit odd that an imaginary spot on the chart can hold prices down or prop them up. Those spots are not imaginary, they represent the collective valuation of every trader currently in the market. As we test that price over a period of time we can "connect the dots" and create lines. That's right, good ol' Support and Resistance Lines.
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