Support and Resistance
The Wash and Rinse To See True Support/Resistance
True support and resistance are found in the meat of the move, not at the extreme highs and lows. To find it, simply draw a zone or box, look for the place that price touches the most, and then pay attention to what happens afterward.
In this lesson, I show how a Wash and Rinse structure at the pivot of a swing uses the most touches to find true support in a market.
The Wash and Rinse has a process that we can follow in real time.
1. Multi-Pivot Line (MPL)
2. Zoom through the MPL
3. Come back and retest the MPL
4. Zoom back through the MPL the other way
What happens in this process, is that buyers are holding some level. Price then busts that level triggering stops and at the same time encouraging shorts to enter. Then the price rips back up essentially cleaning the book of orders and showing where the true support is (at least for the time being).
Once you recognize this structure, you can begin making your own observations and use these levels to read a market or build a setup around it. The most important part is to learn to design a plan with objective rules around what you observe.
Shane