On the mechanism of support/resistance lines (with charts included)

Hello traders,

I've got an interesting and useful observation on support'resistance lines, and need some your advice to understand this thing completely. Here are two charts:

I have noticed, that a line, first drawn as support, later works as resistance level and helps to figure out the target, and vice versa. This scenario is seen on different timeframes, e.g. I've taken these screenshots from tick charts during the previous hour - just to show you, that it's a common, everyday thing.

I guess there is already a correctly worded anwer to my question, and I'm sure I'm not the only one here who uses such tool. Maybe someone can give me a hint for some further information on this topic, considering in particular why this instrument works? Thanks :)

1 member likes this

Comment by DaPipCheese on August 1, 2012 at 2:54pm: Take a look at the research done by Tim Morge concerning Median Lines at MarketGeometry.com

Comment by Peter jcp on August 1, 2012 at 3:25pm: Hi Rao - to get the proper technical / mathematical reasons -- yes check out the theory stuff as already mentioned along with Brian Twomey who I am sure could help.

I will reply later with some other points on trend lines and medians etc and explain how I use them slightly differently - purely for scalping and shorter term moves

Regards

Peter