Relative Force Significant Support & Resistance

9 may 2019

Force is best described as net buying or net selling pressure. It is measured by weighting volume by the direction and magnitude of period price change. Hence higher volume or big positive price level changes will result in high net buying pressure, vice versa.

The Relative Force Significant Support & Resistance indicator takes it a step further by denoting the price levels when the short term force deviates significantly from the long-term mean. So when significant net buying or selling force is detected, the prevailing price level is set as a SSR level until the next significant force event.

How to use the Relative Force SSR

SSR levels consist a mixture of red and green dots. Green dots denoted net buying pressure and red dots denotes net selling pressure.

Price action tends to cluster around SSR levels as these are price levels where the bulls and bears are trying to find an equilibrium. For example, in an uptrend, significant net buying is usually a sign of impending weakness as the bull volume have been expended and there are no net incremental buying volume to support the uptrend.

Vice versa, significant net selling volume in an uptrend which does not result in a price correction means there are sufficient bulls to soak up the selling volume.

To simplify matters:-

#1 Price action above SSR levels implies stock is in uptrend
#2 Price action below SSR levels implies stock is in corrective mode
#3 Clustering of SSR levels implies range bound price action

This indicator is time frame independent, so feel free to adjust the chart resolution to see higher level support/resistance levels or to gauge entries in lower time frames.