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Drawing correct resistance and support-lines

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  • #1,861
  • May 29, 2008 2:56am May 29, 2008 2:56am
Quoting jupiter_peak
Hey guys,

I have a support line at 1.5627.

The trend is down with a formation of what I can tell is a downwards channel. Also, there was a double tops that initiated a downwards movement. If you notice we can see a first wave, a retracement, a second wave, and what I see is a retracement for the second wave.

I strongly believe we could have a third wave downwards before it goes back up.

Tell me your impressions...

Jupiter.
Good morning.

Well spotted, that double top. Strong reversal-pattern as usual.

As you say, we are channeling downward and short position seems safer than long, IMO. That is until we break upper TL.

I expected price to continue upward after breakout-target from ascending triangle (which fitted with round number .5600) was achieved, but we "only" saw an 50 pips bounce.

But bears have been in control, heavily, as we can see on the angle on our 4h TL's. Let's see how this develop.
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Measure twice, cut once
  • #1,862
  • May 29, 2008 3:06am May 29, 2008 3:06am
Quoting vitagene
double top in GU 15 minutes tf ,rsi and stoch and macd pointing down,can we say this is a short term bearish....someone can help?dont know how to detail the information from other time frame...
Very precise one too. Viewable from 15-1h TF. As we can see price started to form pennant right after double top.

Confluence;

This might look hindsight at first sight but I had this strong point of support yesterday. 2 TL and fibonacci all emerging @ .9667 area. I'll post this scenario of strong confluence as soon as I spot it next time.
Attached Image(s) (click to enlarge)
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Measure twice, cut once
  • #1,863
  • May 29, 2008 3:52am May 29, 2008 3:52am
Quoting aediaz1
http://forexfactory.com/attachment.p...1&d=1210719633
Hi aediaz1, great thread.. I enjoy it very much!

I always come here "secretly" .. to learn how you draw them.

I see you're also using LH/HH and LL/HL in your analysis, in the case of: for drawing eg. downtrend channel, supposed if we only have either LH or LL available at the time (just one of them, not both), which one is more significant to be used as the starting pinpoint, the LH or LL? Thanks!

Regards
  • #1,864
  • May 29, 2008 4:23am May 29, 2008 4:23am
Quoting metapips
Hi aediaz1, great thread.. I enjoy it very much!

I always come here "secretly" .. to learn how you draw them.

I see you're also using LH/HH and LL/HL in your analysis, in the case of: for drawing eg. downtrend channel, supposed if we only have either LH or LL available at the time (just one of them, not both), which one is more significant to be used as the starting pinpoint, the LH or LL? Thanks!

Regards
Hi, glad you enjoyed this thread.

I'll try and answer indirectly to your question and illustrate with an chart (the concept of HH/HL) and hope to make it understandable

The reason I add LH LL etc is to make an water-proof "trend-analyze" of which way price is channeling so I'm sure which way I should trade. I just can't stand being caught up in the wrong trend. So I consider a trend strong when it makes new HH/HL in a uptrend or LL/LH in a downtrend.

Take a look at this currently uptrend we have seen on e/u.

Here we have an example where HL is taken out. Then we know that currently uptrend have decreased strength and taking long position have higher risk. On this 4h chart, latest LH doesn't seem too logical but if you look at 1h chart you'll see it clearer. So its pretty similar to support/resistance although I don't take trades on HL/LL. It' simply to measure trends strength which is a part of my system.

When do we know when downtrend is over on e/u ?

We are (soon) forming new LL on 4h chart as we speak. Let's say price heads above previous LH and don't pull back to this area. Then the probability for more upside is in favor.

Remember that we play with probabilities in this game. Even if price should follow this drawn example and form a new HL, we should know that price could "suddenly" head down south again.
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Measure twice, cut once
  • #1,865
  • May 29, 2008 8:21am May 29, 2008 8:21am
Quoting aediaz1
Very precise one too. Viewable from 15-1h TF. As we can see price started to form pennant right after double top.

Confluence;

This might look hindsight at first sight but I had this strong point of support yesterday. 2 TL and fibonacci all emerging @ .9667 area. I'll post this scenario of strong confluence as soon as I spot it next time.
Thanks aediaz1,but i miss it,i open my mt4 late today,and i dont trade at that one because i'm not confident...hehe...but at least that confident grow up after my prediction correct.
  • #1,866
  • May 29, 2008 9:27am May 29, 2008 9:27am
Upwards channel facing a resistance break or will it head downwards after the LTL break...
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  • #1,867
  • May 29, 2008 9:42am May 29, 2008 9:42am
Quoting vitagene
Thanks aediaz1,but i miss it,i open my mt4 late today,and i dont trade at that one because i'm not confident...hehe...but at least that confident grow up after my prediction correct.
Making prediction/spot setups is one thing. Playing by those setups with strict rules is way harder. Make sure you don't give away more than 1% of your account if you just entered this field. The longer you can stay in-game, more you can/will learn without going broke.
Measure twice, cut once
  • #1,868
  • May 29, 2008 9:42am May 29, 2008 9:42am
It seems to me that price is stalling at my S2 line @ 1.5516.

We could be seeing the end of the third wave downwards. If so, we could head upwards during the retracement once we have a break at the UTL.

Have to wait for this candle to close and maybe we could have a new LTL if it indeed goes up.

Lets see what happens. I am glad I spotted this downtrend early and made a whole lot of pips.

Jupiter.
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  • #1,869
  • May 29, 2008 9:46am May 29, 2008 9:46am
Quoting jupiter_peak
Upwards channel facing a resistance break or will it head downwards after the LTL break...
I have resistance around 105.50 area. The probability for pullback is in favor from what my charts tells me. But we are in a strong uptrend so I'm not throwing money after it (yet).
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Measure twice, cut once
  • #1,870
  • May 29, 2008 9:54am May 29, 2008 9:54am
Quoting jupiter_peak
It seems to me that price is stalling at my S2 line @ 1.5516.

We could be seeing the end of the third wave downwards. If so, we could head upwards during the retracement once we have a break at the UTL.

Have to wait for this candle to close and maybe we could have a new LTL if it indeed goes up.

Lets see what happens. I am glad I spotted this downtrend early and made a whole lot of pips.

Jupiter.
Look how this pair moves in (clear) waves. I have usually only spotted it on daily and weekly. Length of each wave is around 150 pips;

And that each pull-back have decreased in strength, which means increased/more aggressively selling on this rate.
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Measure twice, cut once
  • #1,871
  • May 29, 2008 10:05am May 29, 2008 10:05am
Quoting aediaz1
I have resistance around 105.50 area. The probability for pullback is in favor from what my charts tells me. But we are in a strong uptrend so I'm not throwing money after it (yet).

I have resistance precisely @105.46.

I agree. It looks to me that a pullback is coming up. Lets wait for the break.
  • #1,872
  • May 29, 2008 4:17pm May 29, 2008 4:17pm
Hello to all,

sorry if i missed something in the thread, i had no time to read it all, only the pdf on trendline drawing from the first page, but i will catch up on the thread later.

i want to know if i did this right on E/J
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Invincibility lies in the defence, the possibility of victory in the attack
  • #1,873
  • May 29, 2008 4:24pm May 29, 2008 4:24pm
is it better to draw TL on higher timeframes, or to go for instance to H4, zoom out to have a better view and draw the TL from there?
Whats a good timeframe, or a good zoom level?
How far should a TL go back in the past?

Or should i first read the entire thread
Invincibility lies in the defence, the possibility of victory in the attack
  • #1,874
  • May 29, 2008 5:54pm May 29, 2008 5:54pm
The U/J looks like it could reverse and come down.
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  • #1,875
  • May 29, 2008 7:18pm May 29, 2008 7:18pm
Hey Aediaz,

Looks like we have great examples this week.

Check this one out. I spotted it today but could not post it because I was too busy at the office.

It seems to me we still have a last wave down.

This one is clearly moving in waves as well.

Downwards channel in USDCAD.
Attached Image (click to enlarge)
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  • #1,876
  • May 29, 2008 7:34pm May 29, 2008 7:34pm
Quoting Dcb
The U/J looks like it could reverse and come down.

Price is still surrounding resistance at 105.53. We have a very strong uptrend. We just had a couple of bad news from Japan just now. But not that bad.

Huuum.. Havinga better look, we've had 3 complete waves... So, we could have a retracement and back down????

Lets see.


Here's what I have.
Attached Image (click to enlarge)
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  • #1,877
  • May 29, 2008 8:19pm May 29, 2008 8:19pm
Quoting silverheat
Hello to all,

sorry if i missed something in the thread, i had no time to read it all, only the pdf on trendline drawing from the first page, but i will catch up on the thread later.

i want to know if i did this right on E/J

Hi Silverheat,

Let me tell you how I do it. I start on the D1 compression and check the daily trend. I draw lines based on the general appearence of the trend. I lower to H4, H1 and sometimes M30 to get the lines in a more precise fashion. The end result, usually is a channel, triangle, pennant, wedge. But I always draw the 2 lines so at the end, I get a channel of some format.

Like this, I not only check the trend, but also make sure that retracements and breaks are more precisely checked.

I am attaching H4 and D1 E/J carts.

If you notice, there is a double bottom pattern on D1 which reverses the trend upwards. We have resistance @ 164.69 so we could soon have a double top pattern that would reverse the trend downwards. For now, we are in a strong upwards move. Soon enough, we could be heading down.

I hope this helps.

Best.
Attached Image(s) (click to enlarge)
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  • #1,878
  • May 29, 2008 8:30pm May 29, 2008 8:30pm
Quoting jupiter_peak
Price is still surrounding resistance at 105.53. We have a very strong uptrend. We just had a couple of bad news from Japan just now. But not that bad.

Huuum.. Having a better look, we've had 3 complete waves... So, we could have a retracement and back down????

Lets see.


Here's what I have.
Having an even better look. Looks like we have a double top pattern developing on daily. I guess we could head down after all.
Attached Image (click to enlarge)
Click to Enlarge Name: usd_jpy_d1_29_05_2008.gif Size: 19 KB
  • #1,879
  • May 29, 2008 9:20pm May 29, 2008 9:20pm
Quoting jupiter_peak
Hey Aediaz,

Looks like we have great examples this week.

Check this one out. I spotted it today but could not post it because I was too busy at the office.

It seems to me we still have a last wave down.

This one is clearly moving in waves as well.

Downwards channel in USDCAD.
Hi guys,

Closed my short position with - 6 pips. Why, didn't pay attention to the D1 support bounce!! So I am not dure as of now if it will make a third wave down.

If you notice, there's a double bottom at D1 as well.

Perfect example of how we have always to be very precise in our analysis. I forgot to look at daily... and... had to revise my observation.

Lets see what happens.
Attached Image (click to enlarge)
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  • #1,880
  • May 29, 2008 11:40pm May 29, 2008 11:40pm
Hi Jupiter,

if i understand this right, the D1 TL with the steepest slope comes from a H4 TD point, but the line is still accurate on the daily.
I didnt notice the double bottom, but i see a H&S with S1 as the Neckline on your daily.

Thanks, i will go through the whole thread and learn more.

Quoting jupiter_peak
Hi Silverheat,

Let me tell you how I do it. I start on the D1 compression and check the daily trend. I draw lines based on the general appearence of the trend. I lower to H4, H1 and sometimes M30 to get the lines in a more precise fashion. The end result, usually is a channel, triangle, pennant, wedge. But I always draw the 2 lines so at the end, I get a channel of some format.

Like this, I not only check the trend, but also make sure that retracements and breaks are more precisely checked.

I am attaching H4 and D1 E/J carts.

If you notice, there is a double bottom pattern on D1 which reverses the trend upwards. We have resistance @ 164.69 so we could soon have a double top pattern that would reverse the trend downwards. For now, we are in a strong upwards move. Soon enough, we could be heading down.

I hope this helps.

Best.
Invincibility lies in the defence, the possibility of victory in the attack
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