A trend, in the standard definition, is a sequence of higher highs and higher lows, or of lower highs and lower lows. Notice the definitional trap immediately. To know that a high is a swing high you need to see prices come down from it, which takes a stated number of sessions on either side. Every trend identification carries a confirmation lag equal to that number, and every chart in every textbook is drawn after the fact, when the lag is invisible.
The five-session fractal rule used throughout this node makes the lag explicit. A session is a swing high if its close is the highest of the eleven closes centred on it: five before, itself, five after. That definition is mechanical, reproducible and testable, and it means you cannot know that today is a swing high until five sessions from now. Every published divergence chart you have ever seen was drawn with that knowledge and presented as though it had been available at the time.
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What are support and resistance, and how do they form?
Support is a price region where buying has previously been sufficient to stop a decline; resistance is where selling has been sufficient to stop a rise. Two mechanisms produce them and both are behavioural rather than mystical. The first is order memory: a level where a large quantity traded is a level where a large number of holders have a position, and holders who bought there and are now under water will sell to get back to even, which supplies resistance. The second is anchoring, the tendency to treat the first salient number as the reference from which everything else is judged.
A round number, a previous high, an offering price and a fifty-two-week high all become anchors that people trade around, and their doing so is what makes them real.
The change of polarity principle follows directly. Once a resistance level is broken decisively, it tends to act as support on the way back down, because the population holding a position there has changed sides. The sellers who were waiting to get out at that price have got out, and the buyers who missed the break are waiting to buy the retest.
There is no physics here, only a change in who is standing where.
Do support and resistance levels really work?
Trend and support are useful precisely to the extent that they are shared. If the two-hundred-day average is the single most-watched line in the market, then the fact that it is watched, rather than any property of the arithmetic, is what makes its breach eventful. That makes the line real information about other people's behaviour and no information at all about the value of the underlying business.
The discipline that keeps this honest is to write the level down before the event, with the rule that produced it, and then count. A level drawn afterwards on a chart that already shows the bounce is not evidence. The number of ways to draw a plausible line through a set of swing points is large, and the eye is extremely good at finding one that fits the outcome you already know.