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Support and Resistance Trading Simplified

  • #101
  • Mar 29, 2010 3:36am Mar 29, 2010 3:36am
Hi Domino,

Really good information, I am learning a lot...
Just had a quick question... I've been following the trades you were making last week on EUR/USD, and I demo traded what I think the price action was (based on your teachings so far)...

So
price broke out of a 3C(?) resistance - buy, sl at previous low
price made a higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high and failed lower-low
Price made lower high then lower low
Price made lower high but then failed lower-low - buy at break of high, sl at previous low (Last pair of red and green lines) *** not sure about this trade

Now because I was in this trade I thought order flow was upwards. I therefore did not take your last trade (sell after 6F break) as my SLs in place for current orders had not yet been hit...

Please correct me if I have entered any of the above trades incorrectly. I am particularly not sure about the last pair of green and red lines - was it right to enter here or should I have waited to enter at the break of the 1.3499 high? (blue line)

Thanks, your help is greatly appreciated!
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  • #102
  • Mar 29, 2010 7:24am Mar 29, 2010 7:24am
Quoting domino
Resistance zone 6F break on 1hour.

Order flow Idea watching resistance zone with 6 touches switched from support to resistance first touch with 6-7 order clusters below short break.
Thanks for the great information Domino, I've learned a lot.

Is my understanding correct please?......

Every time price returned and bounced off that 6F S/R line, a new cluster of stop orders was placed below the line to protect the new longs. When this S/R line was eventually breached the stop orders were tripped and a decent down thrust was produced.

Now at this point, all those order clusters that had built up have now been executed and the only orders left will be the new stops placed above the S/R line by the new shorts. I guess there will also be longs who were caught out by the break to the downside and now wish to close out if price gets back close to the break line.

If this is true then should we be reseting the count on the S/R line to reflect the fact that the previous clusters have now been taken out by the down move? In this way the name of the S/R line reflects the current active orders only.


Sorry if I've misunderstood you.

Thanks!
  • #103
  • Mar 29, 2010 7:26am Mar 29, 2010 7:26am
Quoting sinn
Hi Domino,

Really good information, I am learning a lot...
Just had a quick question... I've been following the trades you were making last week on EUR/USD, and I demo traded what I think the price action was (based on your teachings so far)...

So
price broke out of a 3C(?) resistance - buy, sl at previous low
price made a higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high but failed lower-low - buy...

Thanks for posting this Sinn. I think it could really help my understanding once we know the answers to your questions.
  • #104
  • Mar 29, 2010 7:59am Mar 29, 2010 7:59am
Nice thread domino !

price action is just price trading.

the meaning of price action in the general term includes candlesticks, chart patterns, and technical analysis. everything that does not involve indicators to make a trading decision is classified as price action. so everything done at J16 is good price action, every S&R trader is trading price action. this is the general meaning of PA

in my personal view, what i am seeing here is more price analysis trading. what matters is just the order flow and where price is at this now moment.

every chart pattern, candlestick or bar pattern is not there any longer if you switch time frame. the only thing that stays the same is price itself.

we use charts to help us understand where the waves are, how to follow price based on our favourite timeframe. choose the one that resonates more for you. the one where your eyes show you something to see.

i was taught to choose the pair you like the best, and learn it inside out. understand the nuances of that pair on that timeframe.

i trade similar to you but i do so on GBPJPY 30 mins. also i try to enter before the breakout and allow 5 pips gap for this pair because i learnt by trial and error that this one is better off with a little bit of room to do it's own thing. if i were to trade GBPUSD i would only put 1 pip because it is more precise and shows more respect for levels. i like to take the first and second pushes only (i actually allow a third push if it comes between 5 to 7 UK time because of the increase in volatility just before the open) and pass on all following entries, i ride them as much as the market will allow. i protect my capital as soon as possible moving at BE +1 so that i get paid for my effort. even if it mean just 1pip.

i believe this picture needs no explaining on my part
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The quality of your life is brought about by the quality of your thinking.
  • #105
  • Mar 29, 2010 8:58am Mar 29, 2010 8:58am
Quote
Order flow Idea watching resistance zone with 6 touches switched from support to resistance first touch with 6-7 order clusters below short break.
Bonjour Domino,

I hope that you enjoyed your weekend ?

Okay, now it does make sense perfectly with my trading style using ONLY price action at S/R because IMO, LOCATION is FAR more important that this breakout pattern itself !!

What I like very much is your way of pyramiding by ONLY following the orders flow aka trend, but how else do you count 6-7 order clusters below this EURUSD short order ?

Thanks for your attention,

Ange l
  • #106
  • Mar 29, 2010 10:52am Mar 29, 2010 10:52am
Hi Domino,

I see that you recommend taking an entry as an S/R line breaks (rather than waiting for a close above/below). I'm wondering if the same goes for exits?

The line chart based on closing prices shows the potential for some great runs. However, when you switch back to candles you see that more often than not a wick will cross one of your stop lines and take you out early.

Could you please confirm if your exits require a close across the stop line please?
  • #107
  • Mar 29, 2010 1:33pm Mar 29, 2010 1:33pm
Hi domino,

How would you trade in a very choppy ranging kind of market?


Order flow can look fairly compressed (visually) in these markets

as the price bounces up and down. Very 'stacked', with some S/R levels

stillbeing hit, but with a lot of up and down chop in-between.


This happens alot in the markets. Post #62 is a perfect example of this.
  • #108
  • Mar 29, 2010 3:41pm Mar 29, 2010 3:41pm
Quoting sinn
Hi Domino,

Really good information, I am learning a lot...
Just had a quick question... I've been following the trades you were making last week on EUR/USD, and I demo traded what I think the price action was (based on your teachings so far)...

So
price broke out of a 3C(?) resistance - buy, sl at previous low
price made a higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high but failed lower-low - buy at break of high, move sl to previous low
Price made higher high but failed lower-low - buy...
well I would would have exited on the failed low failed high with low break retrace right before your last set of lines.. because that ended the buy order flow.
  • #109
  • Mar 29, 2010 3:45pm Mar 29, 2010 3:45pm
Quoting Sutts
Thanks for the great information Domino, I've learned a lot.

Is my understanding correct please?......

Every time price returned and bounced off that 6F S/R line, a new cluster of stop orders was placed below the line to protect the new longs. When this S/R line was eventually breached the stop orders were tripped and a decent down thrust was produced.

Now at this point, all those order clusters that had built up have now been executed and the only orders left will be the new stops placed above the S/R line by the new shorts. I guess there...
guys are trying to move to quick on me well the clusters that are buit up are on the way to the S&R zone.. you can see them cluster will form below the surge so as the price comes down your triggering the stop orders below that area. no need to reset a count because it only happens as approaching the zone.
  • #110
  • Mar 29, 2010 3:47pm Mar 29, 2010 3:47pm
Quoting hornet
Nice thread domino !

price action is just price trading.

the meaning of price action in the general term includes candlesticks, chart patterns, and technical analysis. everything that does not involve indicators to make a trading decision is classified as price action. so everything done at J16 is good price action, every S&R trader is trading price action. this is the general meaning of PA

in my personal view, what i am seeing here is more price analysis trading. what matters is just the order flow and where price is at this now moment....
no explaination needed beautiful
  • #111
  • Mar 29, 2010 3:49pm Mar 29, 2010 3:49pm
Quoting Angel65
Bonjour Domino,

I hope that you enjoyed your weekend ?

Okay, now it does make sense perfectly with my trading style using ONLY price action at S/R because IMO, LOCATION is FAR more important that this breakout pattern itself !!

What I like very much is your way of pyramiding by ONLY following the orders flow aka trend, but how else do you count 6-7 order clusters below this EURUSD short order ?

Thanks for your attention,

Ange l
my weekend was busy! lol but good.. the eur/usd short order start from the bottom and watch the surges as price runs to the resistance.. for every surge there is a sell cluster below it easing up as price rises.. the bulk order will be off the first and the size and clustering will reduce as price falls.. so count the lows thats where the orders are.
  • #112
  • Mar 29, 2010 3:52pm Mar 29, 2010 3:52pm
Quoting Sutts
Hi Domino,

I see that you recommend taking an entry as an S/R line breaks (rather than waiting for a close above/below). I'm wondering if the same goes for exits?

The line chart based on closing prices shows the potential for some great runs. However, when you switch back to candles you see that more often than not a wick will cross one of your stop lines and take you out early.

Could you please confirm if your exits require a close across the stop line please?
if you look at the sum of all the lows and highs yes you will be correct.. bars to whip highs out and lows out and dont close like the line chart forms.. now we are simply looking for areas where that will not be an issue.. notice the trade I showed the impulse from the order cluster creates a large impulse bar which acts as resistance and suppresses the opposite movement.. we will get to this stuff tho.. best tho is to connect the breakout candles and wave if price lows are low connect the high to the lows and as price breaks out high draw line from the low to the connsecutive high wicks and you wont have this problem. but we will get to this stuff later right now is just a primer not a full system yet
  • #113
  • Mar 29, 2010 3:54pm Mar 29, 2010 3:54pm
Quoting Allforex24
Hi domino,

How would you trade in a very choppy ranging kind of market?


Order flow can look fairly compressed (visually) in these markets

as the price bounces up and down. Very 'stacked', with some S/R levels

stillbeing hit, but with a lot of up and down chop in-between.


This happens alot in the markets. Post #62 is a perfect example of this.
we only trade what is happening if there is major choppy ranging going on and hard s&R it doesnt bother us much.. just trade what price is doing and youll be fine.
  • #114
  • Mar 29, 2010 4:46pm Mar 29, 2010 4:46pm
Quoting domino
if you look at the sum of all the lows and highs yes you will be correct.. bars to whip highs out and lows out and dont close like the line chart forms.. now we are simply looking for areas where that will not be an issue.. notice the trade I showed the impulse from the order cluster creates a large impulse bar which acts as resistance and suppresses the opposite movement.. we will get to this stuff tho.. best tho is to connect the breakout candles and wave if price lows are low connect the high to the lows and as price breaks out high draw line...
Thanks for your help Domino. Hope you can keep the lessons going...great information!
  • #115
  • Mar 29, 2010 4:59pm Mar 29, 2010 4:59pm
RZ4F orders at break low

notice how the order flow is changing.. notice how at the beginning of the buy breakout.. its multiple sell candles vrs giant buy candles.. and now the waves have shrunk the breakouts are compressed and order flow is building up below.
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  • #116
  • Mar 29, 2010 6:16pm Mar 29, 2010 6:16pm
Reading the orderflow
gap sell triggering orders multi up candles not close in sync with upper frames and building short orderflow.

price break low sell triggered must create failed high and break low to establish changed orderflow.
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  • #117
  • Mar 29, 2010 6:30pm Mar 29, 2010 6:30pm
Price broke low established order flow change triggered order stop was moved price must not break high to continue
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  • #118
  • Edited 7:24pm Mar 29, 2010 7:06pm | Edited 7:24pm
Price is breaking lower on major upperframe enforcing changed orderflow on higher frame.. drop stop nearing BE.. failed new high and low breaks must continue for price to continue.
at 1:4 R:R

large orderclusters hit

price will need to close make new failed high and break low to continue
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  • #119
  • Mar 29, 2010 7:35pm Mar 29, 2010 7:35pm
Impulse bars make great deciding factors for frame specific orderflow.. why? the impulse bar shows overwhelming orderflow in an area that usually locks in moves... as price will continue to retrace up the impulse bar more orders will begin to stack from all the shorter frame traders stacking stops previous trend riders abandoning positions.. and new sell order triggers piling at the bottom.. plus all the previous orderflow clusters below it act as an attractor for price.

if price decides to continue to break and selloff our new orders will be placed at this low as well to help price selloff and continue trend

imagine you where buyside trader on this and you where long and saw this wicked bar..how would you feel..??? cause ultimately that emotion is what will drive this market.
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  • #120
  • Edited 8:34pm Mar 29, 2010 7:45pm | Edited 8:34pm
notice how price stops and test right before the next cluster...is this buysiders becoming interested at s&R or price building orderflow or market manipulation? well its probably a combination of all three.

for orderflow traders seeing this is quite ordinary price drop hard retrace quick but little hump on lower frames building order flow and a retrigger.
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