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Speed Resistance Lines

Speed Resistance Lines, also called 1/3 - 2/3 lines, are a series of trend lines that divide a price move into three equal sections. They are similar in construction and interpretation to Fibonacci Fan Lines (see Fibonacci Studies).

Interpretation :

Speed Resistance Lines are used to define price support levels. For example, if a security is in a rising trend, its price will usually stay above the 2/3 Speed Line. If prices do penetrate the 2/3 line, they will generally fall all the way to the 1/3 line before regaining support.

Example :

The initial trend line was drawn from the low point labeled "A" to the high point labeled "B." You can see that prices found support each time they fell to the 2/3 line. When prices finally penetrated the 2/3 line (at point "C") they quickly fell to the 1/3 line (point "D") where they again found support.

Calculation :

To draw Speed Resistance Lines:

Draw a line from a major low to a major high.

Draw a vertical line on the day the major high occurred. Divide this vertical line into thirds.

Draw lines from the major low so they intersect the vertical line at the 1/3 and 2/3 levels.

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