Speed Resistance Arcs
The Speed Resistance Arc is a trend finder tool, used to identify sustainable market moves. It works best on trending markets and all time frames. It displays two arcs, which divide a price move into three equal sections (1/3 and 2/3 arcs). The curve of each arc measures trend corrections and the rate at which a trend is ascending or descending.
The simple rule for speed line analysis is that if a market breaks its 1/3 line, it will likely trade to the 2/3 line and be resisted (or supported) there. If it breaks the 2/3 line, then the 1/3 line changes to support (or resistance) and the next price target is the start of the original move. This is a 100% retracement and is also a Fibonacci level.
Speed lines can be a quick and easy way to find market targets. Because they are automatically adjusted to account for new highs or lows, they can help in market analysis long after they provide their first signals. When confirmed by support and resistance, regular trends and technical patterns, they round out the technician's tool box.
Reference: "Real World Technical Analysis", published by Commodity Research Bureau
Draw a Speed Resistance Arc
- Right-click on the chart to display the context menu, and select Speed Resistance Arc.
- Placing your cursor where you wish to start the trend line, left-click and drag over the chart, releasing your mouse where the trend line should end.