Monday was a great example of how support / resistance levels are set and used. Yesterday, I set support @ 44.0. This level is where there is ‘congestion’ in the market. This is both on the down and upside. So when the market goes thru a support level , that level then becomes a resistance level.

So Monday, after the housing market report, the market blew thru support. Once it blew thru the support, the 44.0 level then became resistance on the upside. From the chart below, you can see the market did hesitate at the 44.0 level until the afternoon.

From 12:30 to 2 p.m. , the market re-tested the 44.0 level. Finally at 2 p.m. the market pushed thru closing higher.

Tuesday QQQQ : Support 43.85 | Resistance 44.45 / 44.7

~squid