Shifting of Support and Resistance

Recap of Previous Lesson

• Learned how to identify support and resistance levels.
• Different types of support and resistance: formed by one, two, or all three factors.

Today’s Topic: Strong or Weak Support and Resistance

Rules to Determine Strong or Weak Support and Resistance

1. Resistance:
   • Resistance forms on the call side, support on the put side.
   • Red boxes indicate 100% resistance.
   • The box closest to the spot price determines our resistance.
2. Support:
   • On the put side, the closest box to the spot price is the support.
   • Example: 700 spot price as resistance, green boxes for support.

Identifying Strong Support and Resistance

• Look for yellow boxes along with red boxes.
• If no yellow boxes are near red boxes, resistance is strong.
• Similar approach for support using green and yellow boxes.

Examples and Practical Insights

• Use Nifty and specific strike prices to practice identifying support and resistance.
• Consider volume and Open Interest (OI) for accuracy.
• Yellow boxes indicate potential shifts in support/resistance.
• Volume and OI without yellow boxes indicate strong resistance/support.

Shifting Support and Resistance

• Identify if support/resistance is trying to shift up or down.
• Use yellow boxes to see potential shifts.
• Assume yellow boxes become 100% to test if support/resistance shifts.

Practical Exercises

• Go through historical data to see how support and resistance behaved.
• Use strike prices and volume/OI data to predict shifts.

Conclusion

• Strong support leads to call buying, and strong resistance leads to put buying.
• Weakness in support/resistance is identified by the presence of yellow boxes and shifts in volume/OI.
• Practical examples reinforce understanding and help make better trading decisions.

Key Takeaways

• Practice identifying strong and weak support and resistance using yellow and red/green boxes.
• Understand the role of volume and OI in forming strong levels.
• Use historical data for practical learning and better market predictions.
• Strong support/-resistance levels prevent the market from moving easily in the opposite direction.
• In cases of weak support/resistance, expect shifts and use them for informed trading decisions.

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