Identifying Important Support and Resistance Levels

[martinguitar 10]

So support and resistance levels/zones are based on past price action. Just plotting levels that have been touched a few times by swing points, there was a line at about every 5 ticks. Then i tried to plot them according to volume at price, but i had no idea what the hell i was looking at and the extremes did appear to be important. Then i tried to find the trading ranges and plot their extremes, this has been working, but then i fail to understand how they can be traded. I looked for double bottom/top patterns at the extremes, but there have been more failed patterns than successful patterns and now i am lost. Sure the idea is to enter one extreme and target the other, but this rarely works out (at least for me). Can someone who is trading support and resistance successfully give me a boost? How do you identify important support and resistance levels? What timeframe should i look at to find support and resistance levels and what timeframe should i look at to find entries? As in, which timeframes do you look at?

[zapisy 10]

First, it all depends on what you are trying to take from the market.

 

If you trade longer, day positions, you need to look at a completely different time frame than when you scalp.

But it my opinion, I would always look at all charts at the same time, does not matter what, and how you trade.

 

Because when you scalp one minute, you may not see the major support or resistance, that is present on 60 min, daily, weekly or monthly. That is why, you should always look at the longer charts as well; even when you scalp for 3 ticks.

 

Most people use 3,5,15,30, 60 min chats to trade. So at this point, you should follow them as well. This way you would never be surprised, once you get in to opposite trade at the major S or R. Also, I would always use 5 min chart besides the other ones, like ticks, ranges etc, because 5 min is not too long, not too short, and shows the market behavior.

It's like breakout of 200 MA on daily chart.

 

If you scalp, you can go in at any support or resistance.

If you count for more ticks, points, you do not have to go at the breakout all the time. Because the price tends to go back for a while anyway.

It depends on how strong the volume is.

 

Some people do not use charts at all. They use price of the day before, 5 min before etc. It all depends on how you like to trade, and what you have to know/see.

You can even scalp based on daily chart... There are no strict ways of how you trade, because it is at some point an art.

You have to create your own picture with your own imagination of what you like and where you feel comfortable.

 

Let us know how you trade and what you are looking for.