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Support and resistance trading

  • Post #1
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  • First Post: Feb 9, 2019 2:09pm Feb 9, 2019 2:09pm
  •  jo24
  • | Joined Oct 2018 | Status: Member | 17 Posts
Hello. I realized that the most effective trading method is buy/sell at breakout of resistances/supports. It's a method that works most of the times if a trend indicator is used in addiction. And that's the point, "most" of the times not "all", because sometimes price breaks support/resistance but a little, and doesn't continue along the trend. So I'm wondering: how to know currently when the price breaks a support/resistance but turns back and doesn't continue? Is there a way for you? I know "all" is impossible but I would like to improve this method...any opinion is appreciated. Thank you
  • Post #2
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  • Feb 11, 2019 7:43am Feb 11, 2019 7:43am
  •  geanmage13
  • | Joined Oct 2018 | Status: Junior Member | 2 Posts
That is what is called a fake breakout... I am new to this myself but based on research I did and books I read, the only way you can really make sure that it really is an actual breakout is to validate it with Volume. Considering that the S&R or channels are correctly drawn, it will take some effort from the market to surpass those levels. And that effort will show in volumes..
  • Post #3
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  • Feb 11, 2019 10:00am Feb 11, 2019 10:00am
  •  Juan007
  • Joined Aug 2012 | Status: Member | 1,256 Posts
ebeckers
indicator copyright
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File Type: ex4 SupportResistance (2) (1).ex4   39 KB | 42 downloads
  • Post #4
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  • Feb 11, 2019 10:32am Feb 11, 2019 10:32am
  •  pipfarm
  • | Joined Oct 2010 | Status: Member | 762 Posts
Traditionally as you probably know resistance is the previous swing high and support is the previous swing low, lets say you have a swing up and then a correction down and your waiting for the previous swing high (resistance) to break for you trade , you need to look to you left starting from the current swing low, work your way up marking all the previous swing highs , this will tell you two things , first have we already broken any previous downtrend and second where are the next resistances.there may also be confluence of breaking the old downtrend with your resistance break out.

the reverse for shorts

btw there is no application of volume in forex unlike stocks where only a set of amount of shares in a stock exist.


i hope this helps
After an upswing always a down swing,,,after a downswing always an upswing
  • Post #5
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  • Feb 11, 2019 11:20am Feb 11, 2019 11:20am
  •  KeenPips
  • Joined Dec 2015 | Status: Member | 3,951 Posts
Good points mate! It is important to wait for validation, perhaps using a simple rule like a setup for taking a trade at the location. Wait for a role flip e.g. on an hourly or daily closing basis, depending on your trading time frame and trading style.

Trade safe and prosper.

KP

Quoting pipfarm
Disliked
Traditionally as you probably know resistance is the previous swing high and support is the previous swing low... btw there is no application of volume in forex unlike stocks where only a set of amount of shares in a stock exist. i hope this helps
Ignored
Do your homework, follow the footprints of smart money
  • Post #6
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  • Feb 13, 2019 9:06pm Feb 13, 2019 9:06pm
  •  thomas101
  • | New Member | Status: Member | 9 Posts
I usually wait for a confirmation of the breakout then if I'm confident about the trade I enter. It is all about probabilities. You never know if the breakout is fake or not that is why you need a stop loss to minimize your losses and use a trailing stop loss, target, or whatever trend following indicator you like to maximize your profits.
  • Post #7
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  • Feb 13, 2019 11:01pm Feb 13, 2019 11:01pm
  •  moneymaker2
  • Joined Sep 2008 | Status: neurological anomaly | 449 Posts
I know a lot of people are totally against indicators and I have no desire in getting into a debate on whether they work or not. That being said, I can tell you that I DO use them and find them extremely useful. On my chart I use Bollinger Bands (including the mid-BB), the 5EMA and the 10EMA. Now, I seldom use those indicators for anything but a visual representation of minor support/resistance levels (the major support/resistance areas can just be eyeballed). With those on a chart, and using the other time frames together, for me it is pretty easy to see where the next support/resistance level will be, which helps me to place my TP and to save a few pips when opening a trade (like if I'm looking on a 30m chart and it looks good to go up, but the 5m chart shows it going down to lower BB, I'll wait until the 5m chart plays out and then get into the trade). When you see Daily candles ending (and the next one often reversing) out in the middle of nowhere, you can bet it is butting up against one of those indicators on another time frame!

They may not help you decide IF you get into a trade, but they can help you decide WHEN to get in (and out) of one!

Just my two pips.....
  • Post #8
  • Quote
  • Feb 15, 2019 11:40am Feb 15, 2019 11:40am
  •  jollypk
  • | Joined Apr 2016 | Status: Member | 316 Posts
Indicators can only be helpful if the traders knew how to use them, moreover learning the support and resistance simplifies the job of any trader if it is learned properly in my opinion.
1
  • Post #9
  • Quote
  • Feb 15, 2019 3:40pm Feb 15, 2019 3:40pm
  •  jo24
  • | Joined Oct 2018 | Status: Member | 17 Posts
So avoid a fake breakout is not possible? But I continue searching...
  • Post #10
  • Quote
  • Feb 15, 2019 4:02pm Feb 15, 2019 4:02pm
  •  STrading
  • | Joined Jul 2018 | Status: Member | 78 Posts
Quoting jo24
Disliked
So avoid a fake breakout is not possible? But I continue searching...
Ignored
I think false breakouts is just something we have to live with. Dont think it is possible to predict when they will happen as they are quite common, but who knows there might be a way to at least know when the chances are high that price will continue or reverse.
  • Post #11
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  • Feb 16, 2019 3:02am Feb 16, 2019 3:02am
  •  HeyYou
  • Joined Apr 2015 | Status: taking a long break from FF | 1,233 Posts | Online Now
Quoting jo24
Disliked
So avoid a fake breakout is not possible? But I continue searching...
Ignored
No, no matter how strong the "candlestick's momentum" or whatever. made a lot of testing. shorter term / higher frequency works better with low volatility but overall I still prefer low frequency , even though it's boring .
  • Post #12
  • Quote
  • Feb 16, 2019 3:50am Feb 16, 2019 3:50am
  •  Js3mwtRc
  • | Joined Jun 2016 | Status: Member | 252 Posts
Quoting jo24
Disliked
Hello. I realized that the most effective trading method is buy/sell at breakout of resistances/supports. It's a method that works most of the times if a trend indicator is used in addiction. And that's the point, "most" of the times not "all", because sometimes price breaks support/resistance but a little, and doesn't continue along the trend. So I'm wondering: how to know currently when the price breaks a support/resistance but turns back and doesn't continue? Is there a way for you? I know "all" is impossible but I would like to improve this...
Ignored
You must consider the fundamentals, the correlation between fx crosses and the market participants that hiding behind a break, but always be prepared for the risk you are going to take and watch the space for the price to move.
Feels right this time!
  • Post #13
  • Quote
  • Feb 16, 2019 12:39pm Feb 16, 2019 12:39pm
  •  jo24
  • | Joined Oct 2018 | Status: Member | 17 Posts
Quoting Js3mwtRc
Disliked
{quote} You must consider the fundamentals, the correlation between fx crosses and the market participants that hiding behind a break, but always be prepared for the risk you are going to take and watch the space for the price to move.
Ignored
Not necesarily, fundamentals are useful if you invest, but in short term trading, fundamentals are irrelevant compared to the power of technical analysis which, however, can analyze forces of markets since price and volumes contain all informations of the market. You should only be able to make the right system.
  • Post #14
  • Quote
  • Feb 16, 2019 2:30pm Feb 16, 2019 2:30pm
  •  JCAnderson
  • | Joined Jan 2019 | Status: Member | 12 Posts
Fundamentals could be important even in case of daytrading, because fundamental news could cause short but huge price reactions. That is why it is necessary to be aware of what happens in the world. For example, the trader should look through the list of upcoming fundamental events to be prepeared for any scenario.
1
  • Post #15
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  • Last Post: Feb 18, 2:52pm (24 hr ago) Feb 18, 2:52pm (24 hr ago)
  •  jo24
  • | Joined Oct 2018 | Status: Member | 17 Posts
Quoting JCAnderson
Disliked
Fundamentals could be important even in case of daytrading, because fundamental news could cause short but huge price reactions. That is why it is necessary to be aware of what happens in the world. For example, the trader should look through the list of upcoming fundamental events to be prepeared for any scenario.
Ignored
I was meaning banks reports, since I don't consider news in forex, but it's my method...you are right news are also fundamentals...
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