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A question about daily cluster movement
Billy,
I use the multi-pivots methodology that you invented on a daily basis in order to determine the most likely very short term support and resistance level for each stock and ETF that I follow in the Canadian market. This supplements my intermediary term P&F approach which also identifies R & S levels. I focus only on the 1st support and resistance cluster and determine the median. I do not look at the second cluster levels.
From day to day, the pivot clusters move up or down by a certain amount depending on the movement of price and indirectly because of the new daily pivots. I suspect that some calculation of ATR also has an influence on the movement but probably more on the expansion and/or contraction from top to bottom of the cluster.
I call resistance and support the median of the cluster: I find that there is some value in knowing that:
R & S are moving toward each other or are moving away from each other OR
R is stable while S has been increasing since yesterday
and so on.
My question is: Have you given any though to this part of your cluster model? If so, what are the trading decisions that you would make given your analysis of such R and S movements? or am I losing my time on this aspect of your model?
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