[isatrader]

One area I struggle with is the drawing of resistance / support line to determine entry level and stop levels.

Sometimes I have seen these drawn as horizontal lines through a single high or low and sometimes as a trend line through 2 or more points.

So if I use BT as a current example which (I define) in stage 3b moving into 4a
what would you suggest for the lines to draw for entry and stop positions?

I could have drawn the stop either as a sloping line based upon the series or lower highs OR maybe a a horizontal line through a recent high

Determining the Stage 4A breakdown level takes some practice, as you need to learn to see the position of the key components of the method when you glance at a chart. So it takes time to get the hang of it, but in it's most simplistic form it's when you get the first lower low below a "significant" weekly swing low that formed below the 30 week MA. The 30 week MA must have at least turned slightly lower on the breakdown and relative performance versus the market must be weakening and below it's zero line. So you start by drawing a horizontal line from the first significant swing low that formed below the 30 week MA when it was still rising, and then if you get a higher significant swing low, then you move the horizontal line up to that one instead. For example on the BT chart you posted, the original line would have been at the April low of 350.3 and then would have moved up to the May low of 361.3 once it made a higher high later in the month, and then finally the August low of 365.9 once that had been defined. But, the final two are quite close in price together and so it shows an area of support, which is what you want to see to define a good level to watch.

So this is where the subjective part comes in, as you need to decide if the higher lows are significant enough to warrant them becoming the breakdown level or whether the original low that formed below the 30 week MA should remain the key level. It's not easy, but a good way to think about it is, is a breakdown of the particular low you are watching significant? And does it meet the key criteria that we look for (see the Breakout Quality Checklist thread and reverse all the criteria). If it does, then you can be confident that that's the level to watch. But if it doesn't then it's either not worth considering or might need more time until it can fulfill the key criteria.