Nice levels Matt.
- #4,162
- Aug 20, 2012 4:02am Aug 20, 2012 4:02am
- | Joined Nov 2011 | Status: Trader | 1,078 Posts
Thoughts are things
- #4,179
- Edited 4:53pm Aug 21, 2012 4:08pm | Edited 4:53pm
- | Joined Oct 2011 | Status: Trader | 131 Posts
Hey Matt,
Hope you dont mind if I share my perspective on this topic.
The 78.8 level was definetely an important level to watch, since it acted as support on 3 occasions and then turned into resistance for the last few weeks.
Since it did act as resistance on so many occasions it is not realistic to expect it will do it again. There is just a certain amount of selling/buying power present at a certain level and when it is spent, price will go through.
Thats why many people belive (and rightly so) that we get the strongest reaction from a...
Quezoy, this is interesting. I think that we mainly agree in theory, but maybe disagree on how to apply that theory to the U/J chart. It might have something to do with the fact that you had the level drawn in slightly lower than me, so we are seeing it a bit differently.
I certainly agree that after many consecutive touches as resistance, a level is less likely to hold and is great to trade on the break and retest as support. That after all is the main thrust of this thread. When I talk about a level washing, I don't mean breaking through it, for example as it did today on EUR/USD (see chart attached). Of course, in order for resistance to become support or vice versa, price must break through the level. What I mean by washing is moving quickly backwards and forwards through it, which essentially gives the impression that price is no longer respecting it as either support or resistance. This is what I see happening on the USD/JPY chart we both posted, whereas you see it breaking through and retesting it. Even if you don't regard that as washing I would regard the retest as being on the bar immediately after the breakout, rather than being rounded. In any event, I much prefer to see the breakout happening cleanly as it did today on EUR/USD. I have an order in to buy that on the retest as support.
This discussion began because I was responding to the suggestion that this level might be ripe for a long trade on the first time back retest. What we both would agree on (I think) is that this is not the case. My reason is that is because it has been washed whereas you would say that it has already been retested, and so the first time back trade has been missed.
P.S. standard disclaimer - no-one should pay too much attention to what I say. I have only been consistently trading live since the beginning of this year and am currently breaking even.
