# Simple Rules for Finding Support and Resistance on the Dow By Chris Kakasuleff

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As I have mentioned in prior articles I have mentioned in articles, using midpoints from highs and lows on the Dow, are very useful in helping to determine support and resistance in price. By combining this idea of midpoints with other time proven predictive tools, your ability to predict the future course of the Dow Averages will improve quite dramatically.

I’ve received much correspondence from Gann enthusiasts asking questions about how price can be determined in advance. In this article, we will address valuable components to this issue. Although Gann time wheels must never be ignored in determining price levels and support and resistance points, in this article we’re going to apply some rules to the aspect of looking at peaks and valleys of the Dow Averages, and use the price levels of the Dow alone to predict how high or low it may extend.

As our model we’ll use the high and low of 1990 on the Dow Jones Industrial Average. First, let’s determine the all important midpoints. To determine midpoints on the Dow, you simply combine different highs and lows depending on the time frame you’re interested in. If you’re interested in a long term perspective, you take the current all time high on the Dow and subtract the base market low from this high. You then divide the difference by 2 and add back the low. This number gives you the midpoint support if the market is falling from a high; at the midpoint resistance if the market is climbing from a low. This 50% retracement simple equation has a long historical record of reliability for determining tops and bottoms on the Dow and also individual stocks.

Let’s work this equation using the 1990 high on the Dow at 3000 and the Black Monday low at 1738. The midpoint of these two factors gives us a number of 2369. In other words, a 50% loss on the Dow from 3000 using the price low of 1738 set on the Dow on Black Monday, October 19, 1987, as our intermediate term time factor shows strong support on the Dow in the 2360 area. This 50% retracement equals out to about a 630 point loss on the Dow.