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Drawing correct resistance and support-lines

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  • #21
  • Edited 4:55am Feb 13, 2008 4:36am | Edited 4:55am
Quoting RichD
Another developing on GBPJPY 4 hour time frame


Been following guppy, and we have a breakout on the 15m. Nice short-term entry at the start of new 15m candle formed above resistance-line.

Edit: Fast +60 pip. See how simple you can keep trading when applying right tools ?
Attached Image(s) (click to enlarge)
Click to Enlarge Name: gbp.gif Size: 22 KB
Click to Enlarge Name: gbp2.gif Size: 22 KB
Measure twice, cut once
  • #22
  • Feb 13, 2008 4:52am Feb 13, 2008 4:52am
Breaking out nicely. Whats that 60 plus pips already?
  • #23
  • Feb 13, 2008 4:54am Feb 13, 2008 4:54am
Quoting aediaz1


Been following guppy, and we have a breakout on the 15m. Nice short-term entry at the start of new 15m candle formed above resistance-line.

Edit: Fast +40 pip. See how simple you can keep trading when applying right tools ?

Thats my sentiments. The more indicators I clear off my charts the clearer it gets.
  • #24
  • Feb 13, 2008 4:56am Feb 13, 2008 4:56am
Quoting RichD
Breaking out nicely. Whats that 60 plus pips already?
Wrote +40 first, by the time I have pressed "post" it was +60.

Absolutely, when I first started out trading I used about 4-8 indicators on my charts. It was a complete mess ! Keep it simple, learn technics in the right order;

Support/resistance
Price-action

Then move on to divergence, Gartley patterns, gann-lines etc etc.
Measure twice, cut once
  • #25
  • Edited 5:32am Feb 13, 2008 5:21am | Edited 5:32am
Usd/cad. Long-term down but we have a support-line here if next bar is green too





Edit: Being too eager drawing lines could be fatal as shown on the chart below
Attached Image(s) (click to enlarge)
Click to Enlarge Name: cad.gif Size: 23 KB
Click to Enlarge Name: cad2.gif Size: 23 KB
Measure twice, cut once
  • #26
  • Feb 13, 2008 7:07am Feb 13, 2008 7:07am
Rule of the thumb about trendlines: the more obvious and more touches the trendline has, the stronger the market reaction will be upon the breakout. Basically everyone has the same trendline drawn on their charts and they all react on cascade upon the breakout (either to trigger into position, or stoplosses being run or to manually exit an existing position), thus propelling the breakout thrust even further.

Beware of unclear trendlines. Ask yourself when drawing a trendline: would this trendline be obvious to every trader? if not, the market reaction upon the breakout will be minimum.
  • #27
  • Feb 13, 2008 7:38am Feb 13, 2008 7:38am
Quoting WTB
Rule of the thumb about trendlines: the more obvious and more touches the trendline has, the stronger the market reaction will be upon the breakout. Basically everyone has the same trendline drawn on their charts and they all react on cascade upon the breakout (either to trigger into position, or stoplosses being run or to manually exit an existing position), thus propelling the breakout thrust even further.

Beware of unclear trendlines. Ask yourself when drawing a trendline: would this trendline be obvious to every trader? if not, the market reaction upon the breakout will be minimum.
Well said, nice input for this thread.
Measure twice, cut once
  • #28
  • Feb 13, 2008 5:02pm Feb 13, 2008 5:02pm
Update on usd/chf if some are interested. Bullish channel we are in now, lets see what London session can do with it.
Attached Image (click to enlarge)
Click to Enlarge Name: chf.gif Size: 26 KB
Measure twice, cut once
  • #29
  • Feb 13, 2008 5:30pm Feb 13, 2008 5:30pm
Quoting aediaz1
4H on cable. Possible bullish wedge which can be tested sometime this week. Let's see how it plays out.
Great thread I have a question though. That wedge has been already broken. What is your opinion now? Because the wedge is broken to the upside, but for example candlestick patterns suggest a retracement. Doji, shooting star, etc. On a H4 timeframe I do trust those.
  • #30
  • Feb 13, 2008 5:54pm Feb 13, 2008 5:54pm
Quoting MarkGavalda
Great thread I have a question though. That wedge has been already broken. What is your opinion now? Because the wedge is broken to the upside, but for example candlestick patterns suggest a retracement. Doji, shooting star, etc. On a H4 timeframe I do trust those.

Good question, talking of retracement I have put up a fibo on the 1h chart, and cable have done the famous 50% retracment so technically speaking we are looking bullish for now. Drawn a new wedge on 1h, not 101% ideal as you see in the blue circle. But lets see how price reacts to this.

Possible retest of 4h now support-line (approx 1.9600) before upward action. IMO
Attached Image(s) (click to enlarge)
Click to Enlarge Name: tors1.gif Size: 28 KB
Click to Enlarge Name: torscable2.gif Size: 27 KB
Measure twice, cut once
  • #31
  • Feb 13, 2008 6:17pm Feb 13, 2008 6:17pm
I thought I'd contribute to aediaz1's excellent thread with this example.
Attached Image (click to enlarge)
Click to Enlarge Name: AUDUSD wkly.JPG Size: 190 KB
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  • #32
  • Feb 14, 2008 2:05am Feb 14, 2008 2:05am
Quoting Aurum
I thought I'd contribute to aediaz1's excellent thread with this example.
Keep em coming !
Measure twice, cut once
  • #33
  • Feb 14, 2008 2:08am Feb 14, 2008 2:08am
So far so good on the cable
Attached Image (click to enlarge)
Click to Enlarge Name: torscable3.gif Size: 27 KB
Measure twice, cut once
  • #34
  • Feb 14, 2008 2:17am Feb 14, 2008 2:17am
Woke up too late for the eur/usd.
Attached Image (click to enlarge)
Click to Enlarge Name: torseur.gif Size: 27 KB
Measure twice, cut once
  • #35
  • Feb 14, 2008 2:21am Feb 14, 2008 2:21am
Usd/chf. Had a little bounce of this support.
Attached Image (click to enlarge)
Click to Enlarge Name: torschf.gif Size: 28 KB
Measure twice, cut once
  • #36
  • Feb 14, 2008 2:40am Feb 14, 2008 2:40am
Possible scenario, but anything can happen today.
Attached Image (click to enlarge)
Click to Enlarge Name: torseur.gif Size: 26 KB
Measure twice, cut once
  • #37
  • Feb 14, 2008 2:41am Feb 14, 2008 2:41am
I find that Support and resistant line is so important but basic. Not just Connection 2 lines.

If you want to trade counter trend, support line is very important.
A break against support will usually yield a long bar. It is a good confirmation THis is very important. ever wonder why sometimes your triangle break out did not turn out as you desired. Is there a string break out ?

A support lines must be drawn with heavy whipsawing.. then it will show it is trying to break it.

It also enable you to draw your target. I learnt this on Naked trading.com donkeys years ago. kudos to them.
Attached Image
  • #38
  • Feb 14, 2008 2:52am Feb 14, 2008 2:52am
Quoting FXblader
I find that Support and resistant line is so important but basic. Not just Connection 2 lines.

If you want to trade counter trend, support line is very important.
A break against support will usually yield a long bar. It is a good confirmation THis is very important. ever wonder why sometimes your triangle break out did not turn out as you desired. Is there a string break out ?

A support lines must be drawn with heavy whipsawing.. then it will show it is trying to break it.

It also enable you to draw your target. I learnt this on Naked trading.com donkeys years ago. kudos to them.
The reason why you get big bars around this areas, is because you have alot of orders pending both ways. Then you know you had a valid line.

Not necessarily whipsawing, but rather a good candle-stick pattern (2 red bars, a hammer then to green bars) will form a good point for S/R drawing.
Measure twice, cut once
  • #39
  • Feb 14, 2008 2:55am Feb 14, 2008 2:55am
Look at usd/chf. Faced massive selloff.
Attached Image (click to enlarge)
Click to Enlarge Name: torseur.gif Size: 28 KB
Measure twice, cut once
  • #40
  • Feb 14, 2008 5:56am Feb 14, 2008 5:56am
It is also important to explore the patterns before they're broken because you get a lot of good trading points and overall view from them.
Attached is a M5 GBP/JPY chart. A lot of pivots, fib-pivots and the channel/wedge itself.
Have fun.
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpym5-02-14-2008.jpg Size: 126 KB
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