Support and Resistance Breakouts and Reversals with Volume Confirmation

Summary

This system identifies support and resistance from recent pivot highs and lows, then looks for either breakouts or reversals near those levels. Long setups include a move above resistance or a rejection at support; short setups include a move below support or a rejection at resistance. Each entry requires volume to exceed a multiple of its moving average. Exits use a fixed percentage stop and an adjustable percentage target, and the strategy sizes trades as a percentage of account equity.

The document explains the rules and lists potential weaknesses, including false breakouts, lagging pivot levels, fixed stops that may not fit changing volatility, repeated signals, and sensitivity to settings. It proposes volatility-based stops, trend and time filters, and confirmation across timeframes as possible refinements. No performance results are supplied, so the claims that volume improves signal quality and that the system suits varied market conditions are not established by evidence here. The described rules should be evaluated with realistic costs and position limits.

Key ideas

• Recent pivot highs and lows provide the support and resistance levels used for entries.
• The strategy combines breakout and rejection setups in both directions, filtered by elevated volume.
• Trade exits use a fixed percentage stop and an adjustable percentage target.
• Pivot lag, false breakouts, fixed-stop mismatch, and repeated signals are identified risks.
• The document proposes additional filters but provides no reported results demonstrating their benefit.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.