Method for Automatic Detection of Support and Resistance Levels

  1. Let S = the set of of all data points you wish to analyze.
  2. Sort the set by ascending order.
  3. Chose a margin of error to which your support/resistance levels must conform.
  4. Progress from one end of the sorted set to the other, examining one data value at a time.
  5. Add the percentage error to the data value. See how many neighbors are less than this new value and remember exactly how many that is.
  6. Find the largest number of neighbors within that error margin. Take this group and average them. This is the support/resistance level with the greatest attraction.

Wikipedia has a lot of charts to illustrate support/resistance.

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