A client sent me a research report done by an analyst at the New York Fed that explored the effectiveness/non-effectiveness of intra-day support and resistance levels for traders.
While I was not surprised by the findings (the Short-Term Reversal Levels (STRL's) that I post each day (see below) have long been a staple of this service and my own trading.), it was nice to see a researcher slug through the data to make a conclusive statement. Below are some quotes from the report and a link at the bottom to the report itself.
"Consistent with the market’s conventional wisdom, exchange rates bounced quite a bit more frequently after hitting published support and resistance levels than they would have by chance. Exchange rates bounced off arbitrary support and resistance levels 56.2 percent of the time on average. By contrast, they bounced off the published levels 60.8 percent of the time on average."
"Could an analyst using support and resistance levels published today have any success predicting intra-day trend reversals one week from today? The answer seems to be yes. Five days after their publication, bounce frequencies for our six firms still exceeded those from arbitrary levels for all firms and currencies, and the differences were statistically significant in nine of the sixteen cases."
Download full report
While I was not surprised by the findings (the Short-Term Reversal Levels (STRL's) that I post each day (see below) have long been a staple of this service and my own trading.), it was nice to see a researcher slug through the data to make a conclusive statement. Below are some quotes from the report and a link at the bottom to the report itself.
"Consistent with the market’s conventional wisdom, exchange rates bounced quite a bit more frequently after hitting published support and resistance levels than they would have by chance. Exchange rates bounced off arbitrary support and resistance levels 56.2 percent of the time on average. By contrast, they bounced off the published levels 60.8 percent of the time on average."
"Could an analyst using support and resistance levels published today have any success predicting intra-day trend reversals one week from today? The answer seems to be yes. Five days after their publication, bounce frequencies for our six firms still exceeded those from arbitrary levels for all firms and currencies, and the differences were statistically significant in nine of the sixteen cases."
Download full report
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