Uses of Poisson process in stock price models If I want to find the probability that a stock is going to touch a support or resistance at least once in the next 5days, can I use a Poisson distribution?
The textbook examples usually say that Poisson distribution is used to model either number of defaults or jumps on a stock price, so was wondering what are some other applications?
 A: The stock prices are often modeled as jump-diffusion processes. There's a ton of papers and books on this subject. You can also look up Levy processes.
However, judging by the way you framed your question, I think that all this stuff is not applicable to you. You seem to be attempting technical analysis. If this is the case, then you won't believe in any of this stuff :) Otherwise, you wouldn't be doing technical analysis.
Also, you may find more involved audience in Quant SE
A: Judging by your question. You may still studying the significance of Poisson process maybe in a college? I would say the best way of approaching such kind of problem is think the time of period, which is 5, and number of occurances, which is more than 1. So we can use poisson process to model by doing total probability - the probability of 0 occurance. 1 - e^(-5E(X))
A: Some responses to this are incredibly arrogant. It is possible to focus on a different type of event than simply intraday stock prices. Imagine we try to plot a line between two time periods, along with their slopes and correlation coefficients, and count the number of times a stock would touch x rate of change and/or direction x periods forwards, we could theoretically use poisson distribution to calculate the probability an event could happen within a time period. This would be a reasonable heuristic. I am working on an application at the moment to do this, whether i use Poisson Distribution is uncertain but it doesn't have to be statistical in the classic sense to offer insight.
