Speed Resistance Lines (SRL) is an indicator of support and resistance developed by Edson Gould. It consists of three trend lines based on 1/3 and 2/3 of the retracement move from a high level or a prominent low level. They are used to identify possible support and resistance levels with Fibonacci Fans and Gann Lines.
In the downtrend, the first speed line in the downtrend is taken from high level to low level. The second velocity line is pulled from the high level through the 1/3 vertical height between high and low (first speed line). The third velocity line is drawn from high level to 2/3 high vertical between high and low. In the upward trend the first velocity line is pulled from the low level to the high level and the next speed line is pulled from the low level with the same distance, 1/3 and 2/3.
Most charting software applications have Speed Resistance Lines as a drawing tool. But if not, Speed Resistance Lines can be achieved by adjusting Fibonacci Fans. This can be done by changing the Fibonacci ratios of 61.8% and 38.2% to 66.6% and 33.3%, respectively.
Speed Resistance Lines (SRL) are similar to other trend lines as they mark potential support and resistance levels and in this case they define trends. Two speed lines drawn in the ascending trend indicate two possible support levels, while two speed lines drawn in the descending trend indicate two possible levels of resistance. A break below the lower support line in the uptrend and a break above the resistance line is higher in the downtrend marking the end of the existing trend and the possibility of a new trend emerging. However, the penetrated speed line can also be the support or resistance to the return reaction to the speed line.