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jitasb

Support and Resistance

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Starting before market opens. If I draw in the major S/R levels from the premarket. Then watch how the price behaves at these levels.

As the day progresses, then update the S/R levels and add and delete others as appropriate depending whether price respects them or not.

 

For Example 1. A test of a level then a retest as confirmation it may hold.

For Example 2. A break of a level then immediate rejection of same level back to inside a range.

 

Would this be a reasonable start to investigating a possible trading strategy using only price action S/R levels ? Or is too simplistic ? And may I need more > such as pivots, prev day high lows etc.

 

Just wondering if anyone uses just price action and S/R levels alone as a method of trading. I'm currently doing some demo trading on this and am trying to do some backtesting as well to iron out the rules etc.

 

Would be useful to know if any other traders are trading in this way or similiar.

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Hello Jitasb,

 

What you are doing is right, however trading off a confluence of Different Pivots, Highs and Lows, SR Points is better. I assume what you are Scalping. If you are going for longer term scalp, also try to look at market flow for trading direction.

 

Hope this helps.

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You are describing the way I trade. In these crazy markets this is the only reasonable strategy for me. You never know the trend but the support and resistance levels are easy to identify. Also watch for the correlation between the major currencies.

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  jitasb said:
Starting before market opens. If I draw in the major S/R levels from the premarket. Then watch how the price behaves at these levels.

As the day progresses, then update the S/R levels and add and delete others as appropriate depending whether price respects them or not.

 

For Example 1. A test of a level then a retest as confirmation it may hold.

For Example 2. A break of a level then immediate rejection of same level back to inside a range.

 

Would this be a reasonable start to investigating a possible trading strategy using only price action S/R levels ? Or is too simplistic ? And may I need more > such as pivots, prev day high lows etc.

 

Just wondering if anyone uses just price action and S/R levels alone as a method of trading. I'm currently doing some demo trading on this and am trying to do some backtesting as well to iron out the rules etc.

 

Would be useful to know if any other traders are trading in this way or similiar.

 

If this is how you "started" off trading, you are on the right track. I would suggest you keep this at the core of your logic. W/o starting to add to many other things. Just observe what's happening at these levels you see.

 

Many threads here with S/R as the main influence of the thoguht process. I would recommend some of the threads in the Wyckoff forum, or the acclaimed 'Real Time" Thread.

 

 

------EDIT----

Also IMO, just focus on your S/R leveels you either pick based on various highs and lows, or various trading ranges you see. Leave the calculated levels like floor pivots etc alone.

Edited by forrestang

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Most of technical analysis is just a self fulfilling prophecy, meaning that if every man and his dog is looking at a certain level, then it's likely to be important. You want to trade the blindly obviously levels to start with that everyone can see. Don't look for s/r or tiny times frames, look for s/r on the 30min, 60min and daily etc.

 

If you're new, check out my blog, I made a post yesterday of a list of tips to get you started.

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Check out Al Brook's book, "Reading Price Charts Bar By Bar".

 

It allows trading from a minimalist POV & I find it a difficult but very accurate read. A lot of time must be spent learning the very exacting psychology of each price bar, not very obvious to anyone without years of experience.

 

He uses mostly just a 5 minute chart with a 20 period EMA, trades all instruments.

 

And, remember, no one wins all or even most of the time in this business.

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I think your on the right track. Have you thought about using some simple moving averages? I consider these moving support and resistance. I use the 10, 20, 50 and 200 SMA's - because many of the pro's use these as well, and place orders at and around these averages. You can often watch price bounce 20 - 50 pips when it hits these SMA's for the first time - especially the daily SMA's.

 

All I trade with are fib levels (monthly down to 1hour) moving averages and candlestick patterns. Other levels I'll mark in on my charts are 00 levels (1.6100, 1.4100, 81.00 for example) and highs / lows in the weekly chart. I find that if you have an SMA with a fib level, price will often bounce 20 - 50 pips.

 

I also watch how far price moves away from the 50 SMA - because price action does tend to oscillate around SMA's (other people often use 200SMA). If you get, for example a hammer in the 15 minute chart that has bounced off the 200MA and a 4hr 50% level, that is extended a long way from the 50SMA, and has started to bounce at the beginning of the US session, then I would go in on a day trade and aim for a good 50 pips.

 

Hope you find the post useful

Regards

 

 

Francis

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Hi Jitasb:

if you use Tradestation go to this thread:

https://www.tradestation.com/Discussions/Topic.aspx?Topic_ID=48589&SearchTerm=msheiner&txtExactMatch=

There is an in depth discussion of your concept over a long period by very experienced traders and also some basic code and pictures. key word for a search is msheiner.

Also there is a book and many years of study by Jackson with these "Zones" related to these level with percentage probabilities of a move in either direction, (up or down) and also each currency and commodity.. Jan Arps has them programmed.

These zones can be used with Day Trader Pivot inputs, Yesterday OHLC or Fibonacci or any combination that suits your philosophy.

Best

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  jitasb said:
Starting before market opens. If I draw in the major S/R levels from the premarket. Then watch how the price behaves at these levels.

As the day progresses, then update the S/R levels and add and delete others as appropriate depending whether price respects them or not.

 

For Example 1. A test of a level then a retest as confirmation it may hold.

For Example 2. A break of a level then immediate rejection of same level back to inside a range.

 

Would this be a reasonable start to investigating a possible trading strategy using only price action S/R levels ? Or is too simplistic ? And may I need more > such as pivots, prev day high lows etc.

 

Just wondering if anyone uses just price action and S/R levels alone as a method of trading. I'm currently doing some demo trading on this and am trying to do some backtesting as well to iron out the rules etc.

 

Would be useful to know if any other traders are trading in this way or similiar.

You are on the right track. If you need to learn more about Sup & Res check out James16 thread at Forex Factory (PS: It has over 5000 pages by the way !) You will learn a lot just by reading the first 50 pages. I am not trying to lure people away from here. My intention is just to help. So if I have done anything against the rules I apologize in advance. Hope this will help you.

Cheers !

Pahadi

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  jitasb said:
Starting before market opens. If I draw in the major S/R levels from the premarket. Then watch how the price behaves at these levels.

As the day progresses, then update the S/R levels and add and delete others as appropriate depending whether price respects them or not.

 

For Example 1. A test of a level then a retest as confirmation it may hold.

For Example 2. A break of a level then immediate rejection of same level back to inside a range.

 

Would this be a reasonable start to investigating a possible trading strategy using only price action S/R levels ? Or is too simplistic ? And may I need more > such as pivots, prev day high lows etc.

 

Just wondering if anyone uses just price action and S/R levels alone as a method of trading. I'm currently doing some demo trading on this and am trying to do some backtesting as well to iron out the rules etc.

 

Would be useful to know if any other traders are trading in this way or similiar.

 

I know someone doing that everyday. You can find him in Othernet.org IRC patterns chat room. I have not visit the room for almost a year now due to busy schedule and new job. No doubt this full time trader and his friends still in there posting charts every day.:rofl:

Good Luck.

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Hello.

 

I thought I would post a chart of the sort of thing I'm looking at. It is a 610-Tick chart of the Emini from yesterday. The horizontal lines are the 'levels' that I have 'judged' to be important taking into account Wed-normalmarket and Thurs-premarket price action.

 

In this particular trade there is a breakout of a level then a re-test and a pullback to allow entry. All trades are not like this, for example sometimes you don't get a re-test, sometimes it pullsback only slightly.

 

On top right there is another level 1175.00, where there is what I call a "weakish consolidation". Here is where price is trying to get above the level, but is always hammered back down. Once it breaks below then again there is a slight pullback which may have allowed an entry.

 

As I said earlier in the thread, this is just a "work in progress" as I am demoing in Live market and also trying to do some backtesting (bar-by-bar) which does take time.

 

The risk-reward is something which I am still kind of mulling over. In a lot of cases the trades do tend to work out, but the rewards are more 1:1. So I risk say 1.25pts and get to +1 or +2points before the price comes back to entry.

 

Generally speaking I would be more comfortable with trying to catch the bigger moves when the market can make 3 or 4 points in a typical wave run. So will see how this looks over more extensive backtesting and whether I can improve on my entries etc.

 

Anyway, here is the chart. Any comments on it or indeed on my rambles above would be most welcome.

TL1.thumb.JPG.85809e545029c53da4e7617d0c190f98.JPG

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Hi jitasb,

 

imho you are following the right path by absorbing s&r into your decision process. You may also find it valuable to be alert to volume.

 

You might find the reading of the crude oil futures market of interest at [ame=http://www.youtube.com/watch?v=e-wv8fWJdHk]YouTube - +164 ticks trading CRUDE OIL FUTURES on Th.14.Oct.2010[/ame]. Though it isn't always announced, he clearly is managing his trades based on s&r levels in real time.

 

Good Luck

 

  jitasb said:
Hello.

 

I thought I would post a chart of the sort of thing I'm looking at. It is a 610-Tick chart of the Emini from yesterday. The horizontal lines are the 'levels' that I have 'judged' to be important taking into account Wed-normalmarket and Thurs-premarket price action.

 

In this particular trade there is a breakout of a level then a re-test and a pullback to allow entry. All trades are not like this, for example sometimes you don't get a re-test, sometimes it pullsback only slightly.

 

On top right there is another level 1175.00, where there is what I call a "weakish consolidation". Here is where price is trying to get above the level, but is always hammered back down. Once it breaks below then again there is a slight pullback which may have allowed an entry.

 

As I said earlier in the thread, this is just a "work in progress" as I am demoing in Live market and also trying to do some backtesting (bar-by-bar) which does take time.

 

The risk-reward is something which I am still kind of mulling over. In a lot of cases the trades do tend to work out, but the rewards are more 1:1. So I risk say 1.25pts and get to +1 or +2points before the price comes back to entry.

 

Generally speaking I would be more comfortable with trying to catch the bigger moves when the market can make 3 or 4 points in a typical wave run. So will see how this looks over more extensive backtesting and whether I can improve on my entries etc.

 

Anyway, here is the chart. Any comments on it or indeed on my rambles above would be most welcome.

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Trading S/R, to me, is the epitome of a professional trader.

It is something I have thrown myself into to expand how I trade and look at the markets.

 

I think the downfall of most that attempt to trade S/R is they don't have a way to validate what a S/R level is to them. We see it all the time on various threads and forums. For you, what makes up a level? There are many different rules you can apply to distinguish a level.

 

Personally, I think the way you are starting out, for what it is worth, is a superb way. I see you have already thought of tossing in indicators. For me, to look at indicators in relation to S/R would be more for a confluence and not the first thing I would look at.

 

In another thread, I took a EURUSD long play off, what I deemed, was a good demand level. I also posted an area of concern using how I deem a level is a level. Price rallied right to that level, and dove south. By then, I had a free trade and banked some profit on partial. All this was S/R. Actually..big deal really! Let's see if I can do that in a consistent manner :) Just before that, I pulled a bonehead move and shorted the AU a little too early (in fairness, it was pure slop on my part)

 

Anyhow, this long ramble, in summary, I for one think you are on the right track. I hope anyhow, it is my journey as well!

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  Pahadi said:
You are on the right track. If you need to learn more about Sup & Res check out James16 thread at Forex Factory (PS: It has over 5000 pages by the way !) You will learn a lot just by reading the first 50 pages. I am not trying to lure people away from here. My intention is just to help. So if I have done anything against the rules I apologize in advance. Hope this will help you.

Cheers !

Pahadi

 

That is a great thread for 'simple PA' and it spawned a whole bunch more in various corners of the interwebz. TraderDantes at T2W is very good too and of course Thales thread here (that was previously mentioned).

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I trade very similar. On my platform, I have it plot swing high and lows. I also like to combine the observations of swing high and lows with volume. Typically, you'll see a little volume spike when breaking through those points.

 

Since you talked about looking at the points premarket, I also thought about Tony Crabel's Opening Range. Some use 5 minutes, Others use 15, 30 or even 60 minutes to identify this key price level. At the end of your post, you started to mentioned other key price levels. I am a fan of watching price action at all of those Key Price Levels:

  • Previous Day Close
  • Previous Day High and Low
  • Globex High and Low
  • Open
  • Intraday High and Low
  • Open Range (as you define it)
  • Pivots

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  86834 said:
Most of technical analysis is just a self fulfilling prophecy, meaning that if every man and his dog is looking at a certain level, then it's likely to be important. You want to trade the blindly obviously levels to start with that everyone can see. Don't look for s/r or tiny times frames, look for s/r on the 30min, 60min and daily etc.

 

If you're new, check out my blog, I made a post yesterday of a list of tips to get you started.

 

Your blog appears to be invitation only.

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What most retail traders call support and resistance amounts to lines in the sand...The truth of the matter is that for any liquid market there are both short time frame and longer time frame participants who have positions in progress and you have institutional participants who not only have inventory in place but usually a group of employees who trade around those positions. Finally each group views risk differently and therefore you have different stop losses in place. The reason I am commenting is because the "conventional view" of support & resistance simply won't get you very far...In my opinion what you need to do is to learn to see areas or "nodes" of supply & demand...These nodes vary in size depending on the time frame and they require that you adjust your orientation from "lines in the sand" to areas of balance and imbalance" (related to order flow)...You can see some of this in my thread "An Institutional Look at the S&P Futures"..

 

Good luck

Steve

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Congrats on not getting into the indicator funk. Free stuff in various places of the internet. Basic supply and demand stuff from Sam Seiden at FxStreet (of some benefit)...also highly recommend spending time perusing the huge amount of free material at medianline.com - it takes S/D to a brand new level.

 

Good trading

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