I don´t know if this is the way to ask a question about the weekly report.. so if not please tell me where I should ask these questions...

On the weekly report of december 12, 2009 you say that the GBP-USD weekly has closed below the support line but you are not sure about the validity of that line because the market didn´t react to it properly. What do you mean by that ? What is a good reaction to a support line?

Thx for the answers

A good reaction to a support or resistance line, or a support or resistance zone, would be shown by the price action. Price would react to that line/zone by hitting it or getting close to it, but not being able to break above or below it. If price were to break above or below the S/R (Support/Resistance), the S/R would then reverse its role. A break above resistance changes the resistance to support, and a break below support changes the support to resistance. This is also called a change in polarity.

Vincent

When I say "break above or below", I mean the current candle of the timeframe being viewed, actually closes above or below the S/R. When this does occur (a breakout), price often will go back up or down to the former S/R and hit or get close to it. This is referred to as testing the area.

Ok thx for your reply