Robert,Originally Posted by brrim
We use the word "porosity" to express the property of any potential support or resistance to be penetrated and surpassed by a certain percentage before being declared broken. We will then talk of "failed" resistance or support area.
In multi-pivot trading, it is important to measure porosity allowances. It is obviously a function of volatility, but as a rule of thumb, the penetration of any longer timeframe support or resistance may extent up to the closest daily level.
Let's look at yesterday's IWM action as a good example.
The 10:00-10:30 AM attempt to break above QPP(81.80) and daily R1(81.81) never reached daily R2 (82.24) which was the porosity allowance threshold as next daily level.
The 10:35 AM fall below the lower porosity allowance level of daily pivot (81.52) and WS1 (81.52 too) proved that QPP and daily R1 were successfull resistances. But WS1 (81.52) was now tested as potential longer term support with a rather large allowance to the nearest daily level of daily S1 (81.09) which was hit around noon. The retest of the confluence of daily pivot and WS1 was again a failure because price was pushed back below daily S1 heading into the close. That is why I mentioned in my intraday update that it was important that IWM closed above daily pivot (and WS1) to avoid a bearish bias for the next day.
You can see by my reply that it is all rather simple in practice but very hard to present in a structured tutorial. Market makers learn this through practice and never receive other tutorials than their own experience.
Billy
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