equitiesday-tradingintermediate

No pattern up there doesn't mean no level

Weak support and resistance is a level with no candlestick pattern behind it, and you still need to mark it. Leave that stretch empty and your target lands far too high. Or your stop sits in thin air.

What is weak support and resistance?

Weak support and resistance is a price that has turned the market before but has no candlestick pattern marking it. It's weak only in the sense that no reversal shape vouches for it.

The trouble starts when the next pattern level sits far from price. Say a stock trades at 62.40 and the nearest pattern resistance is 66.90. Between the two sit dozens of candle highs, and price has to get through every one of them.

Skip that stretch and two things go wrong. Your target sits four dollars away when the first real obstacle is fifty cents away. And a long entry gets placed right underneath a ceiling you never drew.

So the job is to fill the gap with something honest. There are four fallbacks, and you use them in order, nearest to price first.

Walk the candle highs and lows one at a time

Start at the current candle and move left. Ask which candle high price must clear next, then the one after that. Don't skip candles because they look ordinary. Jot each price down as you go so you don't lose your place.

Every candle has a high and a low. Each one is a price where the move stopped for that period. A pattern makes a level easier to trust. The plain high still has to be cleared, so it belongs on the map.

This differs from picking swing pivots. Pivots are the obvious peaks you'd circle on a zoomed-out chart. Walking candle by candle often finds a run of small highs that pivots miss. Price has to deal with those first.

Zoom in while you do this, and stretch the price scale. A wide view pulls the eye toward old, dramatic highs. It hides the modest ones sitting just above price, which are the ones your trade will meet.

Merge highs that sit close together into one zone

Two highs or two lows close together, from different sessions, form a multi-session touch. They count whether or not either one is a pattern or a pivot.

When the gap between them is too small to trade, draw one zone around both. Take the 62.40 stock again. Suppose the walk finds highs at 63.05 and 63.30. A long bought at 63.05 aiming for 63.30 has 25 cents of room. That won't pay for a sensible stop. So they become one zone, 63.05 to 63.30.

How close is close? Scale it to the instrument. A quarter or half a dollar can be right on a large cap, while futures need a wider band. This is a judgment call, and there's no fixed formula behind it.

Inside the zone, do nothing. Act once price is clearly above the top or clearly below the bottom.

Drop one timeframe to look for a hidden pattern

If the daily shows no pattern between price and the next level, look at the 4-hour. If the 4-hour is empty too, check the 1-hour. One step down at a time.

A shape that's invisible on a higher chart often shows up one step lower. A single daily candle can hide an engulfing pair or a small morning star on the hourly. When you find one, mark its extreme: the lowest low for support, the highest high for resistance.

Back to the 62.40 stock. Say the hourly shows a bearish engulfing pair inside one daily candle, with the pair's top at 64.45. That high becomes your next resistance line above the zone.

Stop well before the 5-minute chart. Levels drawn there pile up quickly and clutter the map. Use the lower chart to fill in one missing level. Keep the map itself built from the daily, 4-hour and 1-hour.

Digging below the hourly for something to draw is a warning sign. The candle walk or a cluster is probably the better answer there.

The rare candle that makes a level on its own

Sometimes there's no pattern anywhere, no nearby cluster and nothing one timeframe down. What's left is a single abrupt candle that spiked to a sharp high or low and snapped back.

That candle still counts. Its extreme marks where a burst of buying or selling ran out. Mark the wick tip as a line.

Expect this to be uncommon. In practice the candle walk or a cluster usually fills the gap first. Reach for the lone candle only after those come up empty.

Once it's drawn, treat it like any other level. It's a buy while price holds above it and a sell while price stays below it. Exit on a candle close through it. A wick that pokes past and returns doesn't count, however ugly it looks in the moment.

Clear the map each day and redraw from the new price. Yesterday's fill-ins shouldn't linger once price has moved through them.

Filling a gap in your level map, step by step

Work from the current price outward, nearest level first.

  • Note the nearest pattern level above price and the nearest below.
  • Measure how far price is from each one.
  • Zoom in on recent candles and stretch the price scale.
  • Walk left from the current candle, marking each high price must clear.
  • Do the same with the lows below price.
  • Merge any two highs or lows too close to trade between into one zone.
  • If a stretch is still empty, check one timeframe lower for a pattern.
  • Mark that pattern's extreme, then go back to the higher charts.
  • If nothing else exists, mark the tip of a lone abrupt candle.
  • Keep three supports and three resistances in total, and delete the rest.

Frequently asked questions

It's a level with no candlestick pattern behind it. Usually that's a plain candle high or low, or a cluster of them. It still marks an obstacle price has to clear, so mark it rather than skip it.

Yes, as long as price hasn't closed through it. Treat it like any level. Buy while price holds above it, and exit on a candle close below it.

No. Drop one timeframe below the chart you're on and look there. The 5-minute is for timing an entry, and levels drawn on it clutter the map fast.

Compare your levels with the Morning Map

The Morning Map is a free page and a free 8:40 ET email. It shows the model's SPY, QQQ and IWM zones, drawn before the open on a TradingView chart. Hold them up against the levels you walked out yourself and see where they agree.

Every trading morning at 8:40 ET our model draws the SPY, QQQ and IWM zones it expects to matter, on a TradingView chart, before the open. Where price reaches one, it has turned 74 percent of the time. Free, no account. See today's map