DEFINITION of 'Speed Resistance Lines'
A tool in technical analysis that is used for determining potential areas of support and resistance. This tool, consisting of three trendlines, is created by drawing the first trendline from the most recent low to the most recent high when the asset is in an uptrend, and from the most recent high to the most recent low when the asset is in a downtrend. The other two trendlines are drawn with smaller angles in an attempt to predict areas that will act as possible barriers in the event of a retracement.
BREAKING DOWN 'Speed Resistance Lines'
Speed resistance lines are similar in interpretation to the Fibonacci Fan indicator. Many traders will watch for a move below the two-thirds level to signal a continued retracement toward the one-third level. It is important to remember that other technical indicators should be used when the price of the asset is near the trendline to confirm the strength of the predicted support/resistance.