Should you care about the all-time high resistance as a trader?
Like, when the price comes near the all-time high resistance after making a good move in the downward direction, should you ignore this price level?
Or will it act as a resistance and move the price down again?
What’s the win rate of the price moving down from this all-time high resistance?
That’s the question I had.
So, I’m testing all-time high resistance 100 times on the S&P 500 stock market index to find the truth.
If the price reverses from the all-time high resistance more than 50% of the time, then you should pay attention to it.
If the price ignores all-time high resistance most of the time, then we can ignore this resistance.
I went to the S&P 500 one-day timeframe chart.
When the price went down by a good amount, I waited for it to come back up again near the all-time high point.
If the price reacted to the all-time high point, like moved down again, or slowed down, or started ranging, then I counted that all-time high point as a working resistance.
But if the price clearly ignored it like the resistance was nothing, then I counted it as not working.
I mainly counted all-time high resistance where the price had clearly made a good downward move.
If the downward move was relatively small, then I didn’t see the all-time high point as a good resistance.
I mean, small downward moves are not noticeable to all traders.
So, the resistance of these small downward moves will not be noticeable to most traders either.
After testing the last 100 all-time high resistances, it got a win rate of around 42%, which is horrible.
Since I was testing if it worked or not, the breakeven win rate is 50%.
So, a 42% win rate is way below the 50% breakeven win rate.
In other words, the all-time high point as a resistance… sucks.
The price completely ignores it most of the time.
The profit graph consistently went in a downward direction from the start.
Why did this happen?
Well, it’s probably because the stock market price moves up most of the time.
So, most of these all-time high resistances are ignored by the price while moving higher.
So, when the price comes near the all-time high resistance in the stock market, it’s better not to take a short trade.
It’s better to ignore it just like the price does.
If you want to see a 60% win rate support resistance strategy, then check out the support resistance video on the Trading Rush channel.