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Support and resistance levels.

  • #1
  • First Post: Oct 17, 2007 8:12am Oct 17, 2007 8:12am
Hello again people

could someone please tell me away quck and simple way of determining support and resistance levels, i am trying to learn to trade with as feww indicators as possible (only using candle charts at the moment.) and although i am about breaking even at the moment i feel knowing the S@R levels of a session would be helpfull in weeding out rougue candles!!

I am currently using Oanda and am not sure wether the platform can do this automatically for me or not.

All help most apprieciated as always http://www.forexfactory.com/images/icons/icon10.gif

Good luck to each and all of you!
  • #2
  • Oct 17, 2007 11:08am Oct 17, 2007 11:08am
Common support/resistance areas are pivots, fibonacci retracement lines and trend lines.

Pivot = (high + low + close) / 3
Trend lines must hit two points on a chart
Fibonacci retracement lines are drawn from the top to the bottom of the recent range, they can also be drawn the other way round.

hope this helps
  • #3
  • Oct 17, 2007 11:18am Oct 17, 2007 11:18am
Horizontal levels of support/resistance: previous swing high/lows, double top/btooms, ranges upper/lower bands, etc.
  • #4
  • Oct 17, 2007 3:52pm Oct 17, 2007 3:52pm
Find all areas where price has made significant reversals of direction, and stick a Line on the chart. You can refine the positioning by going down to Daily - 4hr charts.

Treat these as key areas. Don't assume that a S/R area is no longer valid just because it goes back into the mists of time. Check any chart and see how these areas repeat after years of trading.

See attached
Attached Images
  • #5
  • Oct 17, 2007 5:18pm Oct 17, 2007 5:18pm
Quote
Treat these as key areas. Don't assume that a S/R area is no longer valid just because it goes back into the mists of time. Check any chart and see how these areas repeat after years of trading.
This is very true.. I remember when GBP/USD broke the $2 barrier a few months ago. The highs back in and 1991 and 1992 acted as resistance. We only had to look this far back because that was the last time GBP/USD was so high.
  • #6
  • Oct 17, 2007 5:25pm Oct 17, 2007 5:25pm
Great explication peterfm
  • #7
  • Oct 18, 2007 5:27am Oct 18, 2007 5:27am
Would i be right in thinking that ploting of S@R levels is not an exact science?
where you draw the lines on the charts are they approximate levels or exactly worked out points.

Sorry if that sounds stupid but i really want to get this right in my head!!

Thanks again
  • #8
  • Edited 10:32am Oct 18, 2007 7:56am | Edited 10:32am
Quoting Rking1976
Would i be right in thinking that ploting of S@R levels is not an exact science?
where you draw the lines on the charts are they approximate levels or exactly worked out points.

Sorry if that sounds stupid but i really want to get this right in my head!!

Thanks again
Well if there is anything that can be classed as an exact science I haven't seen it yet.

To answer your question it easier to think of these as Areas of interest, places where it would be reasonable to expect price to reverse, stall or ignore. As I said, once the main areas are picked out then go to lower TFs to look for more exact price points to watch Price Action.

On the AUDNZD chart I've highlighted an area we would watch as price returns to it. I marked the Weekly points in the 1st image and then refined it on the Daily. And then we can watch Price Action on the shorter 4hr chart and make trading decisions from there. Even if you play shorter TFs, knowing that these areas are close can help you sort the possible signals you're getting from whatever indicators you use.

Nothing's 100% in this game, all you can do is try and move the odds a little in your favour.
Attached Images
  • #9
  • Oct 18, 2007 7:57am Oct 18, 2007 7:57am
Price movements in the 4 hr chart
Attached Image
  • #10
  • Oct 18, 2007 10:28am Oct 18, 2007 10:28am
I agree that it's more about "areas of decision taking" rather than "exact levels of reaction". Just like trendlines, horizontal level of S/R cannot be expected to work (if they are to work at all in the first place) right to the pip.
Attached Image
  • #11
  • Oct 18, 2007 10:13pm Oct 18, 2007 10:13pm
would it be wise to be wary if profit target are near support and resistance (horizontal or diagonal lines) ? perhaps TPs should be above/below support/resistance ?
  • #12
  • Oct 18, 2007 10:30pm Oct 18, 2007 10:30pm
Quoting findcount
would it be wise to be wary if profit target are near support and resistance (horizontal or diagonal lines) ? perhaps TPs should be above/below support/resistance ?
Sounds like you're looking at something in particular there Findcount.

What do you see? {if anything}
  • #13
  • Oct 19, 2007 6:05am Oct 19, 2007 6:05am
Quoting Bemac
Sounds like you're looking at something in particular there Findcount.

What do you see? {if anything}

from the posted chart ? i wasn't referring to the chart.

just thinking that if the price is going my way and heading towards support or resistance that i should be wary of the price retracing from those levels.

i can avoid that by taking profits earlier.
  • #14
  • Oct 19, 2007 7:44am Oct 19, 2007 7:44am
Quoting findcount
would it be wise to be wary if profit target are near support and resistance (horizontal or diagonal lines) ? perhaps TPs should be above/below support/resistance ?
Although it really depends on the pair your are trading, and the trading environment, I find it useful to put S/L's slightly outside of the support/resistance, and T/P's slightly inside, in both cases usually 2 or three times the spread, sometimes more. The basic reasoning is that in the case of a SL, you want to make sure your model is really violated before dumping the trade as a bad call, and in the case of a TP you want a reasonable guarentee that the close point will be touched. This varies of course depending on whether I am going to be at my desk or not for the TP (the SL's I have learned the hard way not to move away from the price). If I am around, I'll remove the TP and just keep an eye on the price movement & indicators as the price moves towards that level. If it crosses the TP, perhaps the best thing to do is just treat it as a new trade, and adjust the SL and next TP accordingly.
  • #15
  • Oct 20, 2007 5:37am Oct 20, 2007 5:37am
Quoting HalifaxCB
Although it really depends on the pair your are trading, and the trading environment, I find it useful to put S/L's slightly outside of the support/resistance, and T/P's slightly inside, in both cases usually 2 or three times the spread, sometimes more. The basic reasoning is that in the case of a SL, you want to make sure your model is really violated before dumping the trade as a bad call, and in the case of a TP you want a reasonable guarentee that the close point will be touched. This varies of course depending on whether I am going to be at my desk or not for the TP (the SL's I have learned the hard way not to move away from the price). If I am around, I'll remove the TP and just keep an eye on the price movement & indicators as the price moves towards that level. If it crosses the TP, perhaps the best thing to do is just treat it as a new trade, and adjust the SL and next TP accordingly.

many thanks.....also setting SL outside of Support and Resistance will help with stop hunting ?
  • #16
  • Oct 20, 2007 5:57am Oct 20, 2007 5:57am
hello man, i hope this is what are you searching for... my video for everybody In this video i am explaining how to use traendlines and only them... Soon will make videos about pivots and fibos-)
Inserted Video

quality is not really good


here's a rapidshare link for a higher quality

http://rapidshare.com/files/63872672...resistance.wmv
  • #17
  • Last Post: Oct 22, 2007 1:35pm Oct 22, 2007 1:35pm
thanks for your input guys, i have a much better understanding of where to place and use S&L levels now!

already seeing an improvement in my trading.

Cheers
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