I’m following the school and it’s mentioned “testing” a few times but I don’t understand how it works.
“Like horizontal support and resistance levels, trend lines become stronger the more times they are tested.”
“Often times you will see a support or resistance level that appears broken, but soon after find out that the market was just testing it.”
What is testing, why do you, or they, test, and how is it done?
Hi, I’m a newbie too. From the explanation of testing according to the school, when a particular support or resistance line has been ‘touched’ a couple of times without it been broken, it becomes a strong support or resistance. For example, if the support line is at 1.3460 and over a period of time the prices drop to this level but always bounce back up, it becomes a strong support. Each time the prices fall and touch this level, it has tested the support. The more it tests the support and doesn’t break through it downwards, the stronger the support becomes. Hope this explanation helps and more experienced traders can also correct me if I got it wrong.
testing means price is reaching or touch the lone or crossing…(remember one thing…those r not lines but they are levels or regions) the R\S lines.
when we say that the price tested the Resistance or support level means…
the price touch the line or crossed the line…
if price crosses the line…then we tell as price tested and breaks the line(R\S)
if price turned back after touching the line…then we tell as price rejected the line fter tested the line…
see the picture below…u will get it.
in case 1
the price tested (touched or reached) the line and rejected or reversed.
in case 2
the price tested the line and breaks through line and then again retested the line and later moved in the same direction(down)
in case 3
the price tested the line and breaks the line and then tested the same line and breaks the line in reverse direction
after that again tested the line ans reversed upward
now in case 4
the price tested and breaks the line…abd again retested and breaks the line in reverse direction…
then again tested the line and reversed…and then again breaks the line…again tested and rejected…and finally breaks the line.
in the all cases …
price tested one time in case 1
2 times in case 2
3 times in case 3
and 6 times in case 4
as price tested more number of times…then the line become more important…
more number of tests = more important the level or line
less number of tests = less important the level or line
so the line in case 4 is more important as it tested 6 times…
hope this heals you…if u have any further doubts…please ask me…thank u
very well explained. but though the references and the lines are good, at the back of your mind, you should understand that SR levels are not lines. They are price regions. These regions are places where a lot of buys or lot of sell orders are sitting. If a lot of buy orders sit at a price region, it becomes support and vice versa. This needs to be very clear.
This is what my friend explained:
there are like
thousands of different players at work
some are trying to push the market to a point where stop losses are hit
if you put a stop loss and you are long
the stop loss is basically sacrificing that buy order and giving someone your money
what happens when that happens?
more people jump in
therefor the market makers make more commisions
or money on the spread or w/e
the market makers will move price if needed to get more people to jump in
sometimes that means taking their stops themselves
because they know the price will go up
right after
you have to understand they lose money when price goes in one direction for a long time
because no one else is trying sell when price is going up really fast
they have to prove those sell orders
so price doesn’t come to a standstill
Sound legit?
Thanks for the input 
