In the trading room you will hear me refer to "Crunchies" from time to time. This
is a not very creative word for areas where the market has spent some time
and is therefore a possible level or resistance or support. I have never liked
using the terms support or resistance in trading due to the expectation implied
in their meaning. Therefore I choose "crunchy," which doesn't imply
expectation and simply describes what has happened in the past.

I draw crunchy lines at points on a swing where at least 4 bars will be
connected. I usually just use four myself. I do these in a look forward way not a
look back way. Meaning I draw them as the market unfolds, therefore the exact
level drawn will not always reflect the exact crunchiest level but its close

Here is an example of a chart before the line is drawn and after so you can get
an idea.

Initial Swing made.
Crunchy line drawn through the point where it will touch four bars.
Example of the return to a crunchy line. It is useful in adjusting targets or
stops and also for playing divergences against in a range.
When the market is in a range (often defined by me as times when the NYSE
A-D remains between -600 & 600) then you will find several layers of crunchy
lines drawn. You want to keep your charts clean and only draw the ones that
are about as far as the "normal" swing distance on your time frame. That is
something you determine in your homework and should know well before you
ever pull the trigger. Draw your crunchy lines on your 30-minute/60-minute
charts and/or daily charts to get a wider more significant view.

Some of the best
system signals will show up on tests of these crunchy levels.
Waiting for those that line up while not fight divergence on the LTM is one of
my favorite setups.

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