Understanding DESR:
How to Read Support and Resistance Levels
DESR examines historical SPY price movements under opening conditions similar to those of the current trading session. This analysis produces a distribution of outcomes that forms the basis for the day's expected support, resistance, and closing-price levels.
In analysing the current data set, we incorporate both longer-term historical observations and recent market behavior. Statistical techniques are used to evaluate historical price ranges and closing prices while accounting for differences in the amount of available data.
These observations are combined through a systematic process to establish the day's expected support, resistance, and closing-price levels.
The resulting levels provide a historical reference for evaluating intraday price movements rather than predictions of where prices must trade.
Statistically Derived Support and Resistance Bands
Morning Expectations vs. Actual Market Behavior
The morning chart displays the statistical levels established at the opening of the trading session.
SPY Trading vs. Previously Established Levels
The afternoon chart below illustrates how actual SPY prices moved relative to those levels throughout the day.
The comparison allows readers to evaluate market behavior against the original expectations without implying that the levels predict market direction.
The DESR Historical Evidence scale provides a relative indication of the amount of historical data supporting the DESR analysis.
The indicator incorporates a measure related to statistical uncertainty and presents results on a visual scale adjusted for distribution abnormalities. Larger historical samples generally provide a stronger statistical foundation, while smaller samples introduce greater uncertainty.
The scale does not represent the probability of a particular market outcome or a formal statistical confidence measure.