The Buy and Sell Envelopes : Measuring Support Resistance

Among the many uses of Taylor's numbers is the creation of the buy and sell envelopes. These are the key support and resistance numbers that traders use for short-term buying and selling. They also serve another purpose: range prediction. The numbers can be averaged to determine what tomorrow's range should look rike. Once the market has opened and traded awhile, this range can be superimposed on the market to predict the day's high or low.

Questions

1. What are the components of the buy envelope?
2. What are the components of the sell envelope?

Answers

1. The buy envelope consists of the following four numbers: the average of the last three decline numbers subtracted from thelast high; the average of the last three buying under numbers subtracted from the last low; the last low; and the Trend Reaction Buy Number (the LSS Pivotal Day Sell Number).
2. The sell envelope consists of the following four numbers: the average of the last three rally numbers added to the last low; the average of the last three buying high numbers added to the last high; the last high; and the Trend Reaction Sell Number (the LSS Pivotal Day Buy Number).