Quote Originally Posted by brrim View Post
Billy; You mention the 95% probability associated with the S3 level. Do you have any probabilities associated with
other support levels.
Thank you in advance.
Best regards,
Robert
This is an excellent question, Robert, and is one of the main source of edges when trading with pivots.
All I have as an objective resource is an old confidential study that was performed by a statistician at my request 15 years ago for the investment bank I was working for.
In his conclusions, the statistician stressed that the levels were much distributed along a normal distribution curve on each timeframe, similar to a standard deviation structure.
50% of the time, the maximum moves are within R1 and S1.
66% of the time, the maximum moves are within R2 and S2,
95% of the time, the maximum moves are within R3 and S3.
I am confident that an update wouldn't change much the observations.
You can easily check - as I mentioned from time to time - that QQQ experienced its weekly lows at WS3 on the strongest down weeks this year. It marked a reversal for at least a few days each time.
MS3 could provide a reversal area for 2 or more weeks. (You need to adjust QQQ for yesterday's dividend).
Billy