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Need help with Support, Resistance and Fib

  • #1
  • First Post: May 5, 2007 11:07pm May 5, 2007 11:07pm
I have always believed that Supports and Resistances can provide good methods of trading:

Buy a bounce from a Support line.
Sell a Failure from a Resistance line.
Sell if a Support is broken
Buy if a Resistance is broken

But I dont know where these lines are. I usually open up FXCM platform and read the commentaries as well as the Trades they took. Sometimes, they would explain where the support and resistances are and true enough, these hold. For example. FXCM is short GBPUSD @ 1.9930 and they have their Stops at 1.9950 where they think is the current Resistance level is. This had held last friday inspite of a USD negative NFP (albeit not very USD negative). But how is FOMC and BOE rate decisions going to affect the Support/Resistances? Seems that its bullish GBPUSD with these in consideration.

Some suggests using MA lines... 89 EMA? 40 EMA? And on what timeframe?

Some suggests FIB lines drawn from the highest and the lowest price of the rally. They even use this to determine the trend - if a trend is broken or not.

Im currently studying a trading system based on S/R, Triple Screen Methodoloy and Trend lines (for forex, do we look at Daily? H4? or even Weekly chart to draw the trend?)

I appreciate if you could provide your insights
  • #2
  • May 6, 2007 12:09am May 6, 2007 12:09am
Quoting BurgerKing
I have always believed that Supports and Resistances can provide good methods of trading:
I appreciate if you could provide your insights
Hi BK,
Here is one view of what I see.
hope it helps/
Attached Image
  • #3
  • May 6, 2007 1:57am May 6, 2007 1:57am
Quoting Bemac
Hi BK,
Here is one view of what I see.
hope it helps/
Can you explain what those lines/dots are and how yuo got them?
  • #4
  • May 6, 2007 4:21am May 6, 2007 4:21am
Candle Stick Pattern & Fibonacci retracement
http://www.forexfactory.com/showthread.php?t=13224
and the Vegas 1 hr Tunnel.
  • #5
  • May 6, 2007 8:27am May 6, 2007 8:27am
BK,

Most of the analysts are using a 200 MA, EMA, WMA, take your pick. They also use Fibs on the monthly and weekly frames, as they have a tendency to work much better than on the lower frames. The next time you see their numbers, check out the above.
  • #6
  • May 6, 2007 11:52am May 6, 2007 11:52am
Hello BurgerKing

S/R lines are usually old highs / old lows, round numbers, moving averages, trend lines (both the normal ones and the ones from chart patterns) and fib retracements and expansions. The middle of long candles also seems to work.

Bulkowski did some research and explained it in one of his chart pattern books, but the book is in my ofice and I can't get it right now.

The problem with moving averages is the old one: which periods to use? Sometimes price bounces off some MA and sometimes ignores it. The same goes for fib levels.

Try and look into significant highs and lows, but try to look into congestions zones as well. These are levels that have seen a lot of buying and selling and are therefore very meaningful to a lot of people.

ForexSmurf
  • #7
  • May 6, 2007 12:46pm May 6, 2007 12:46pm
Quoting BurgerKing
Can you explain what those lines/dots are and how yuo got them?
http://www.forexfactory.com/showpost...7&postcount=28
Joe DiNapoli's CopOpXop {Fib Extensions of ABC}
  • #8
  • May 6, 2007 1:11pm May 6, 2007 1:11pm
There's a Support & Resistance indicator but I don't know how to trade this way.

And this is the instruction from the author:
Quoting Scorpion
I suggest you play around the indicator with different settings; human learns faster that way. My intraday setup is on 30M chart with Step = 15, Precision = 5, Shift = 1. Bars is just the number of bars you want the indicator to cover.

Normally we use this in two ways. First, if the price breaks below support (blue), we go short. If price breaks above resistance (red), we go long. Second way, if price touches the support and bounces back up, we go long. If price touches the resistance and bounces back down, we go short.
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  • #9
  • Edited 2:07pm May 6, 2007 2:04pm | Edited 2:07pm
There's sites that tell you the s/r levels also calculators out there that allow you too do it yourself.

http://www.mataf.net/en/analysis-pivot.htm

Has them for quite a few, there's also scripts (dependent on what platform you use) that will enter them automatically for you. Here's the formula

Classic Formula
Pivot := (High + Low + Close)/3 Or := (High + Low + Current_Open)/3

Resistances: Supports:
R1 := 2*Pivot – Low
S1 := 2*Pivot - High
R2 := Pivot + (High - Low)
S2 := Pivot - (High - Low)
R3 := R1 + (High - Low)
S3 := S1 - (High - Low)
R4 := R2 + (High - Low)
S4 := S2 - (High - Low)
And so on… And so on…
  • #10
  • May 6, 2007 2:24pm May 6, 2007 2:24pm
Quoting shadeslay
There's sites that tell you the s/r levels also calculators out there that allow you too do it yourself.

http://www.mataf.net/en/analysis-pivot.htm

Has them for quite a few, there's also scripts (dependent on what platform you use) that will enter them automatically for you. Here's the formula

Classic Formula
Pivot := (High + Low + Close)/3 Or := (High + Low + Current_Open)/3

Resistances: Supports:
R1 := 2*Pivot – Low
S1 := 2*Pivot - High
R2 := Pivot + (High - Low)
S2 := Pivot - (High - Low)
R3 := R1 + (High - Low)
S3 := S1 - (High - Low)
R4 := R2 + (High - Low)
S4 := S2 - (High - Low)
And so on… And so on…
I have an indicator based on this, but its not accurate. and have always failed to provide the support and resistances.
  • #11
  • May 6, 2007 2:43pm May 6, 2007 2:43pm
personaly i look fibonacci points from plotting main "trendlines" in 4h and placing the fibonacci between the "trend" lines.

personal observation is that dayly pivots are too random in the effect. as in only analyseing one singel data from yesterday.

here is some chard example what i use. (its only one way in thousands)

http://www.kapteeni.org/iRMA/rsiexample4h01.gif

as it seems now its "offbalance" as i placed that diamter in the start(diameter between the "trend) and only draggin with it as time pass on. trying to keep "solid" scale. Marking the old place with line befour moveing it. so the "levels" stay "same"
  • #12
  • May 6, 2007 3:07pm May 6, 2007 3:07pm
Yes they aren't perfect. And often hit older (daily pivots) weekly or even monthly pivots. You might need to adjust the time frame on the indicator or try another (some aren't to accurate). But they give a good ruff indication of where resistance will be met.
  • #13
  • May 6, 2007 5:08pm May 6, 2007 5:08pm
Hi BurgerKing


James16 Private Forum covers support/resistance very well. Definately worth checking out.

all the best


Quoting BurgerKing
I have always believed that Supports and Resistances can provide good methods of trading:

Buy a bounce from a Support line.
Sell a Failure from a Resistance line.
Sell if a Support is broken
Buy if a Resistance is broken

But I dont know where these lines are. I usually open up FXCM platform and read the commentaries as well as the Trades they took. Sometimes, they would explain where the support and resistances are and true enough, these hold. For example. FXCM is short GBPUSD @ 1.9930 and they have their Stops at 1.9950 where they think is the current Resistance level is. This had held last friday inspite of a USD negative NFP (albeit not very USD negative). But how is FOMC and BOE rate decisions going to affect the Support/Resistances? Seems that its bullish GBPUSD with these in consideration.

Some suggests using MA lines... 89 EMA? 40 EMA? And on what timeframe?

Some suggests FIB lines drawn from the highest and the lowest price of the rally. They even use this to determine the trend - if a trend is broken or not.

Im currently studying a trading system based on S/R, Triple Screen Methodoloy and Trend lines (for forex, do we look at Daily? H4? or even Weekly chart to draw the trend?)

I appreciate if you could provide your insights
  • #14
  • May 6, 2007 10:16pm May 6, 2007 10:16pm
Quote
I have an indicator based on this, but its not accurate. and have always failed to provide the support and resistances.

This is because we have yet to see a logical explanation of why pivots points should work. Eur/Jpy recently broke through a multi-year high. You could observe price go ape when it reached that point, because that is a point everybody is watching. Why would anyone observe, say: (High + Low + Close)/3 + (High - Low)? I mean no disrespect, but I don't think pivot points or Vegas' fib lines for that matter have any reasoning behind them, and I really, really, really like to undestand the logic behind indicators I use.

ForexSmurf
  • #15
  • Last Post: May 7, 2007 12:57pm May 7, 2007 12:57pm
From what I can tell with pivots, is they largely represent where price was previously. Then you use high, low and close to determine how much movement was previously made, to give indications of where price might meet resistance or support based on previous price actions. In a way it's similar to price memory, which is more the memory of those trading. Why it works is largely because so many use them, I've often wondered if trending would even work well if no one used the method.
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