The DIBS Method... No Free Lunch continues
Just wanted to show quick how I use s/r, look at the s/r level of 167.94:
At point 1 price got to this level and shot back up a long way. This tells me that this level is going to act as s/r area. Looking back historically I can see that this level is an s/r area as well.
At point 2 price went through the support and came back up to retest it before continuing down. Now the support is acting as a resistance. This is a common characteristic for a break of a s/r level
At point 3 price tried to break through this level but it shot down again as there wasn't enough momentum. A few hours later price broke the resistance and retested it at 4, making the old resistance a support (look at M15 chart).
Today there was a test of the of this support again at 5 (H1 chart) and this was the perfect DIBS, this is as good as an entry can get with DIBS imo. It was right of a heavy s/r area so a breakout from the IB would be a breakout from the support level. Remember how DIBS gives us a low risk - high reward opportunity when used at the right times.
Now look at the 167.63 level. This has some historical meaning as well. Do you see how it acts as support and resistance and how when it's holding as resistance (between 2 and 3) its rejecting the price. If I would have been in the DIBS trade this morning this level would have been my first concern and if you look at the M5 charts you can see that price did stop here but it didn't shoot away from it and when price broke that level it went on to test the low of yesterday which Jarroo had pointed out as well. So if you took the DIBS watch the price action at these levels. You can see that the first level was broken pretty easy, but the second level was rejected so that's when you would have taken the first half, as Jarroo so masterly did because he was watching the speed of the move. If price keeps pushing against a s/r level then there's a fair chance that it might be broken as was the case with the 167.63 level today, but when price rejects a level as was the case when price was testing yesterday's low then you know that that level is holding (for now).
I have marked these levels by a line, that's just how I do it. That doesn't mean that this is the only price that matters. Instead this means that around this level (+/- some pips) is a s/r level, just as you can see in Jarroo's charts where he has marked out areas instead.
Cheers mate. I'm out for most of the day now, see yall tomorrow!
Glad to see some of you had a good ride on the EURJPY. I was in for most of it but made the classic error of closing my final position too soon. Thought it was down at serious resistance. Lesson learned! But a few bucks added to my account so it is at least a paid lesson. I also took a mediocre trade short on the NZDUSD. Free so far but not much juice. Although, as I write this is seems to be falling nicely. Fingers crossed.
The best part of the DIBS method for me is that once I hit B/E and ride free it is also zero stress. I do tend to get a bit tense before breakeven. I'm sure many of you can relate to that. I trade 1.5% or less on all trades. I've drawn up a spreadsheet which I find usefull so maybe I will post it tomorrow with an explanation on how I use it.
Beware of the FOMC announcement later today as it will most likely cause a few ripples in the market. I have to go into town now to meet a buddy and his family for dinner so I will let my Kiwi trade ride on a trailing stop. Catch you folks tomorrow. Cheers.
Nothing wrong with banking pips tiger. We all go through the lessons learned.
Of the many things I like about the DIBS, stress free trading is up there on the list. That's why when you get there, you let it rrrriiiiiddddddeeee.
