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Need Help on marking S/Rs

  • #1
  • First Post: Jul 21, 2009 9:28am Jul 21, 2009 9:28am
Marking S/Rs is very important to my trading. But I have difficulties in identifying the best possible S/Rs. I feel the levels I marked are far from perfect.

Wonder how I can improve it. Perhaps, it is not a lot to learn. Is there reliable source that I can compare my levels with, for example?

I have marked the level on EURUSD Weekly, but don't seem to be excellent.

Please give me suggestion! A lot of thanks!
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  • #2
  • Jul 21, 2009 10:57am Jul 21, 2009 10:57am
Hi Kk,

What you are doing is the basic idea, you are just doing to much of it. What you want to do is find the major points of support and resistance. You don't need to find them all. Look for the most tops and bottoms you can find along a fairly straight line and you will have it. Remember that the two will at some point switch their roles. Chart the ones that will have an immediate effect on your trading, another words if we are at 1.42 you don't really need to chart the lines at 1.25 right now. That is not say they are not good to know in your mind, but they are not curently doing anything to your trade. In time you will be able to look at the chart and spot the ones you need right away.
Things that can help you are using trend lines along with the sr that will define further where you want to look. You may also want to use a shi channel, pivot or fib indicator to further define things for you. JUst don't be dependent on indicators, learn to read a chart blind first and get a good fell for what you are seeing. The indicators then can guide you better. The best way to learn is just what you are doing keep drawing them until you are comfortable with it. You can further define the lines you draw by changing the positions as you guy down the time frames and they become clearer to you.

Here is a chart I did of the euro/dol week. Lines are not exact but you can get the idea. I am also using a barry sr indicator and a fib indicator to show you there help.
The fib lines are purple, the barry is red and green diamonds, the trend lines are green and sr lines are turquise. You will notice that the sr lines are pretty close to fib lines, my fib lines go from the highest to lowest points for that currency. There is also one cross trend line maroon. You will see on that we keep bouncing off it, which indicates we have to come to a breakout at some point up or down, as all the trend lines are basicaly meeting here.

Good Luck
Tom
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  • #3
  • Jul 21, 2009 11:58am Jul 21, 2009 11:58am
Woah, I almost had a seizure looking at all those lines.

Why do you need to know where S/R is if you're nowhere near it? I mean seriously, all you're doing is making more work for yourself, giving too much visual stimulation, and confusing the hell out of yourself. When you have that many lines on a chart, how in the world are you supposed to make any decisions?

Price is at 4200. Unless you plan on putting on a 6 month trade, you only need a couple of lines.

Take a look at these charts. The first is the daily, then the 4 hour. I think they provide more than enough information to make a trading decision.
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  • #4
  • Jul 21, 2009 12:01pm Jul 21, 2009 12:01pm
Quoting Dopey
Woah, I almost had a seizure looking at all those lines.

Why do you need to know where S/R is if you're nowhere near it?...
YES , Less is more in trading. I have yet to see anyone prove that to me otherwise.

I never have more then a few lines on any one chart. There is no need it will just paralyze you with overload in information

Nice post DopeyTFC

Mike
  • #5
  • Jul 21, 2009 12:05pm Jul 21, 2009 12:05pm
One last chart. Here's the 4 hour chart above zoomed down to the 15 min. How much more info does one need to take shot at the upside?
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  • #6
  • Jul 21, 2009 12:07pm Jul 21, 2009 12:07pm
Quoting mbqb11
YES , Less is more in trading. I have yet to see anyone prove that to me otherwise.

I never have more then a few lines on any one chart. There is no need it will just paralyze you with overload in information

Nice post DopeyTFC

Mike
Thanks Mike. I was just playing some Medal of Honor. It's just not as much fun fragging the computer.
  • #7
  • Jul 21, 2009 1:50pm Jul 21, 2009 1:50pm
Quoting kk007
Marking S/Rs is very important to my trading. But I have difficulties in identifying the best possible S/Rs. I feel the levels I marked are far from perfect.

Wonder how I can improve it. Perhaps, it is not a lot to learn. Is there reliable source that I can compare my levels with, for example?

I have marked the level on EURUSD Weekly, but don't seem to be excellent.

Please give me suggestion! A lot of thanks!
I've been doing this for the best part of a year so I must be an expert, right?

If you're going down this route you HAVE to find the key levels and the easiest place to find them is on the monthly. Clear the rest of the lines from your chart and find one big S/R zone. See the charts attached.

I've attached the Monthly Line Chart; Weekly Line Chart - Weekly Bar Chart and the Daily Bar Chart. Just from this sequence you can be ready to expect some sort of PA around 1.4300. Certainly all the long trades I take up to this point will have this area as TP. I'll then sit back to see what happens.

Working from the monthly down you can easily see the key areas. If you need more help ask.

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  • #8
  • Jul 21, 2009 7:54pm Jul 21, 2009 7:54pm
Quote
Wonder how I can improve it. Perhaps, it is not a lot to learn. Is there reliable source that I can compare my levels with, for example?

u often visit a great S/R thread --- j16 thread. what i usually do is view the charts posted there & compare the plotted S/Rs with mine.
This way u learn & at the same time validate if your own plotted S/Rs are correct.

try to pick the very heavy S/R areas. start with monthly, weekly, daily (u already know this, right)
over time, u will get to refine your S/R plotting.
  • #9
  • Jul 21, 2009 9:42pm Jul 21, 2009 9:42pm
Thanks a lot a lot, all comments here are pure gold.

Let me clear that the W1 chart back to year 1997 is not something I trade on, it is just for practising purpose. Yes, in trading, I won't need those far-from-now S/R levels.
  • #10
  • Edited 9:57pm Jul 21, 2009 9:43pm | Edited 9:57pm
Hi twj1usa,

Thanks for your detailed reply, and your sharing of other chart line/indicators that you are using. In terms of the way of identifying S/Rs in your method, I find that most of the top/bottoms (red/blue diamonds) are not crossed by your turquise S/R lines. Alternatively, if we want to draw sufficient S/R to cover the top/bottoms (red/blue diamonds), there will be too much of them. That is the exact reasons why I make my post here. I find it is a bit arbitrary in identifying the best ones.

kk007

Quoting twj1usa
Hi Kk,

What you are doing is the basic idea, you are just doing to much of it. What you want to do is find the major points of support and resistance. You don't need to find them all. Look for the most tops and bottoms you can find along a fairly straight line and you will have it. Remember that the two will at some point switch their roles. Chart the ones that will have an immediate effect on your trading, another words if we are at 1.42 you don't really need to chart the lines at 1.25 right now. That is not say they are not good to know in your...
  • #11
  • Jul 21, 2009 9:44pm Jul 21, 2009 9:44pm
Quoting Dopey
One last chart. Here's the 4 hour chart above zoomed down to the 15 min. How much more info does one need to take shot at the upside?
Dopey,

Thanks a lot for your experience sharing! As I said I won't trade a chart like that, just for practising. Sounds that you don't even need to look at the W1 to trade successfully. Really Great!

kk007
  • #12
  • Jul 21, 2009 9:45pm Jul 21, 2009 9:45pm
Expert PeterFM,

Thanks so much. You again open my eyes. I have not think about use MN for 20 years of data! I may have a look at this now. Also, your way to look at the line chart first to look at the close is quite useful. It seems easier to look at for me. I have tried to look at this now too. Thanks for your step-by-step guidance here. It would be great if you can give advice on further questions here!

kk007

Quoting PeterFM
I've been doing this for the best part of a year so I must be an expert, right?

If you're going down this route you HAVE to find the key levels and the easiest place to find them is on the monthly. Clear the rest of the lines from your chart and find one big S/R zone. See the charts attached.

I've attached the Monthly Line Chart; Weekly Line Chart - Weekly Bar Chart and the Daily Bar Chart. Just from this sequence you can be ready to expect some sort of PA around 1.4300. Certainly all the long trades I take up to this point will have this area...
  • #13
  • Jul 21, 2009 9:45pm Jul 21, 2009 9:45pm
Dear all,

Many thanks for those give advices in this thread. I understand that it is crucial to use multiple timeframe to identify S/Rs. Nevertheless, what would you do if the higher timeframe S/Rs do not match the lower timeframe ones? If they are very close, we may consider that as in the same zone. However, if the MN tells you the S/R is 1.4288, but the D1 tells you the S/R is 1.4200, for example, would you consider them two or one?

Also, how would you evaluate the significance of all the identified S/Rs? Would you think a 15 year ago MN S/R more important or a clear S/R on D1 for the last 12 month more important?

cheers,
  • #14
  • Jul 22, 2009 1:46am Jul 22, 2009 1:46am
But remember these areas are only potential S/R areas until they have proven to hold.

I use all significant S/R lines whenever in the past they were created but you could start with the most obviously important points from more recent times.

As an experiment I've pulled up a pair that I never trade USDCAD and created two images for you to highlight what I'm saying.

The oldest of these goes back to Dec 2002 but see how price still reacts 6 years later.

Once you've picked the key areas on the Line chart then switch quickly to a bar chart and you will see that even if subsequent closes never got back up to that line the bar highs often did. It's that rejection and lower close that you hope to exploit when trading these areas.

So, the question is; what will happen at 1.1011? Price Action will give a clue.

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  • #15
  • Last Post: Jul 22, 2009 8:55am Jul 22, 2009 8:55am
Thanks PeterFM,

As a less-experienced trader, my confidence on using less obvious S/Rs is relatively weak. So, yes, it is a good idea for me to begin with the most obviously S/R first.

Again, your uses of line chart -> bar chart seems to be an quite effective method to identify the key S/Rs. I think I start to being able to distinct more important ones from less important ones.

Yes, the S/Rs years ago is still valid as shown clearly by you in this and last post.

Also, your post makes me have further thoughts:
Higher timeframes S/Rs in general have a higher importance than a lower timeframes S/Rs. But HTF S/Rs tend to be older than LTF S/Rs, and so does it means recentness doesn't really matter? At the end of the day, big players also look at the multi-timeframes charts to mark their S/Rs.

Thanks for your post and also other people who has responded. I think simply marking important S/Rs is not a problem for me now. If I follow step-by-step of your method, I can get them: When I move down from high to low timeframe, I just get the most obvious few in each timeframe.

I can now process to the next stage, possibly is to evaluate the reliability of a S/R.

Cheers!
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