Debate on technical tools

I have used EMAs and BB for S/R-type info for years. Try a 5,10 and 20 period EMA (generic mid-BB is roughly 21 period EMA) on different time frames. Watch the 15 minute, 30 minute and 1 hour charts (with a 5 minute chart thrown in when price is moving slowly) and you will see those EMAs and BB levels on the different time frames acting as Support/ Resistant levels, too. So when it bounces for seemingly no reason, check the other time frames...you'll find your reason!!

i do agree with you that S/R are important, many traders base their style on them, i used to use them myself. I have used every indicator on the book till, i was influenced by FTI and Crucial Point. Then i began questioning why the usage why the success and how to profit from seemingly random oncoming data while having a predictable price behavior

once i began taking this as a higher level education, learning Economics on my own, Learning to calculate all the indicators by hand, learning, the structure of the market, they way they are quoted, the different theories on market and market movement.

i began to sit down in front of the screen for many hours at a time taking naps here and there and observing. once i began to understand the market i became consistently profitable. this thread is to analyse the usage of our indicators and why they work.

but back to the subject: predictive not so much, but as i said before measures actual current volatility, i do encourage you to research that term and see what it means. in my opinion a trading range is established with S/R, a range that measures and indicates to the trader what is within normal variations. when price trades above this range the S/R failed, and didnt really fail per se, just means that the bid/ask quoted continues to adjust to buy/sell pressure. and these quotes will too have a deviation.

you see for every s/r i can also point to a failed s/r, so instead of using them to predict a move, i find it more useful to measure a range for better entrances.


now the REAL QUESTION HERE IS , why are YOU using them?
whats your rationale behind using them?
are you simply mechanically following them, and gambling or whether this time it will work or not? how do you look at the market as a whole, come to a discretionary trading decision?

do you agree that S/R is a measurement of volatility? or do they tell you some thing else that YOU have found?

Although your profile states you have no experience, you obviously are experienced as you are consistently profitable (congratulations, by the way!). Why don't you show everyone a screen shot of your chart and explain your analysis/why you get into a trade....and how you decide to get out of one.

Indicators are only a tool, a very useful tool!!
Some so called gurus trash them, because they cannot make them "work" - well that's their problem

In trading we basically look for repeating patterns and use them to our advantage
These patterns can be either pure price or a derivative (e.g. indicators etc) - who cares - so long as whatever pattern you use proves to be profitable.

If you question a signal your "pattern" gives you - don't use that methodology - if you are not comfortable using it, it aint gonna work!!

If you are drawn to a particular type of analysis - then study it and form your own rules from what you observe (and making use of existing written info, if it works for you) i.e. look for repeating patterns that YOU see and that result in a profitable outcome, and then refine, refine, refine

Whatever methodology you use (they all work) - you have to put in the chart time until you have complete faith in your system

Personally before I take a trade, I must have a price pattern occurring at some S/R level, and an indicator signal whatever that might be, and they must all confirm the trade
By the way, my indicator is usually the 1st to give a signal, or warn of a pending signal

The two indicators mentioned previously in this thread are pretty useful
i.e. moving averages - have a look at the 10ema, it gives good confirmation for entries and exits depending on whether price close above or below the ma

Bollinger Bands - they are something special
Statistically bands set at 2 std dev (the normal default) contain 95+% of price action, so they are pretty good S/R levels. What are the stats for horizontal S/R levels?
Their formation tells you what the market is likely to do, are they narrow, wide, forming a throat, are they sloping up/down or horizontal,deviating or converging, are they forming a bubble, cone or rectangle, has the band nearest to the price action turned over or the band farthest from the price action turned over, where is price trading relative to the bands, they tell you if the current price momentum is sustainable, are the bands showing divergence with price etc etc
The bands tell you what type of signal you should be looking for, breakout, retracement, reversal or swing

One thing we should not do it clutter up our screen with too much "info", whether it be indicators or a multitude of horizontal S/R levels and fibs and trendlines etc that sometimes look like the a loco shunting yard

Keep it simple, a 2 sec glance at a chart should tell you if a chart is worth spending extra time on

Do Your Own Research!!!

Excellent post!! The 2 second glance comment is spot on.