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We've seen so far that the 10-8 bands can
#1 - Give us clear cut buy and sell signals
#2 - Help us tell trend and hold onto the trade

Now we'll look at how they can help us see support and resistence

SUPPORT AND RESISTENCE

Support and resistence are 2 of the most powerful concepts in trading

SUPPORT

When we have a 10-8 band buy signal and the market is trending higher
The lower band (8 day) acts as support for market declines

RESISTENCE

When the 10-8 bands are on a sell signal and the market is in a downtrend
The upper moving average band (10 day) provides resistence for rallies

You can see this played out perfectly on this chart of the SP 500

The importance of having a moving support and resistence area
Can not be over stated

Agressive traders could buy all corrections back to the 8 day moving average
Agressive traders could sell all rallies to the 10 day moving average

You could put a certain dollar amount for the stop on these trades
Or only exit the trades if the market moved 2 bars outside the bands against you

A VERY INTERESTING CONCEPT

Lets say you only wanted to use the 10-8 bands for one thing
And that was as a buy or sell signal
When the 10-8 band support or resistence is hit

Lets say you have other techniques you use to tell trend
But you can see that the 10-8 bands do tend to work as support and resistence

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BUY POINTS IN UPTRENDS

Take the last 10 days highs divide by 10
That would be your buy signal for that day if hit during an uptrend

SELL SIGNALS IN DOWNTRENDS

Take the last 8 days lows divide by 8
That is your sell point for the day if hit during a downtrend

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This concept, as all the concepts with the bands
Works on all time frames, in all markets

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