[isatrader]

Hi! I'm currently going through the stage analysis study guide - questions and answers  and for the very first example, can you explain the placement of the resistance line? thanks in advance!

Hi yuriythebest, don't get too bogged down in the placement of the lines. They are just highlights of the near term resistance on the chart. As you are correct that it would still be a level of resistance. However, the purpose of the lines was just to show the Stage 2A breakout level - which can occur below older resistance. As when determining the Stage 2A breakout level, we look for the nearest significant high, which can sometimes occur below an older high like what you've highlighted.