Posted in Finance, Accounting and Economics Terms, Total Reads: 250
Definition: Speed Resistance Lines
SRL is a tool that is used to determine areas of potential support and resistance. Comprising of 3 lines of trends, the SRL is created by drawing the first line from the latest low to the latest high when the asset in question is in an uptrend, and vice versa i.e. from the latest highest to the latest low when the asset in question is in a downward trend. This forms 1 of the 3 trend lines.
The other 2 trend lines are drawn with acute angles so as to predict regions that will act as areas in the event of an aberration.
The Speed Resistance Lines are useful particularly when looking at issues in situations of strong trends. The SRL is then used to determine support and resistance. In extremely crude language however, SRL measures the line that determines an uptrend or a downtrend.