holy grail support & resistance?

Hi all,

I was wondering how you guys are looking for support and resistance at your charts.
because not every level is strong enough to hold on. do you trade without any indicator or do you use only supply demand on higher frames?

for myself, i am trading with a volume spike indicator to find levels but i am curios that is working...
so i am searching for other options.

looking forward to the reply's

,Trading Kid

Hi If you are new to trading Forex learn this right away. Trading is not about just using one or to things. You can figure out good support levels by looking for exhaustion candlesticks( candlesticks with big wicks) where price has been rejected if this level is touch a second time it becomes then a good area of support/Res. Look at the volume in these areas. Also so look for places where price has been absorbed. Look at Daily charts first to find important levels. Mark them off then go to a lower time frame to trade. But finding a good trade is not about using one or two things. Many retail traders including myself make this mistake in the beginning. They say oh I only use price action or volume. But it is about looking at price action, levels, volume, exhaustion, absorption, market profile> mainly fair value areas and point of control areas, low volume areas, waiting for price to retrace to these areas, sentiment of the market and most importantly knowing the fundamental news and economic reports. There are other things to consider also like what are bond and option markets doing... But don't worry about that for now just concentrate on learning the things I have mentioned If you concentrate and learn the first 6-7 things I have mentioned you will be successful. Also always know who is in charge of the market....buyers or sellers. Trading is not a hobby but is a career and about learning to adjust to new situations...So if you are really serious about learning how to trade then get to work....and Good Luck!

I love Support/resistance. But I also take into account the whole market structure. I also look at time of day, and how close to a major news event. Support and resistance are a major aspect of price action. Now you need to understand other price behaviors. How do spikes act? how do stop runs act? How does a spike compare to a slow grind up? what happens when price coils up for 20 hours in a 10 pip range then breaks out? Figure all this out and your on your way. Rather then add indicators to support/resistance system to increase your odds, add in another price behavior, for example a spike into support/resistance. Back test it 1000 times, know that signal by heart, know how many trades you would be expected to win/lose out of 100 trades. Good luck!

If you manage to make pips with it, then yes it works pretty fine
To the point, I determine S/R levels by eye. It's rather some psychological point than something that's is determined technically, just put yourself at the place of the crowd and find their sentiments.
I don't take S/R levels as assumed points for entries, just a range where price will possibly range in. Technical analysis is weak when using S/R solely try to combine it with volumes, RSI and other similar stuff. OR just switch to fundamental trading like me
Good luck

Most good trades happen from a point of more than just S/R but a confluence of things such as a fib retracement level, a Bollinger band (upper, lower or the center line, which is also referred to as the "mean"), a Moving average, which is what is known as "dynamic S/R", and then is always divergence on an oscillator (pick one).

Confused yet? You should be. You deserve that for having the nerve to come in here as a newbie and start a thread and put the words "holy grail" in the title.

I`m not really a rookie i just wanna take the attention of traders with holy grail, offcourse there isnt a way to trade 100% winners but i think there is a way to find levels to trade 70% and thats the reason i create this topic. so, i am pretty curious how you find levels

i don't believe in fibonacci btw

greetings Trading kid

hi, I normally start with daily then work back to whatever tf your trading on because even the high or low of the daily candle will act as resistance or supp and you need to know exactly where you are price wise. Train your eyes to spot supp res it will pay off more in the long run

I like to set the SR's on the H and L in a weekly chart. See EU weekly top pic.

The SR's are then seen in the EU daily bottom pic, but study the Price Action in last 2 months around these levels, in centre pic.

Hi - I've posted how I do SR trading in the discussion "90% of trader fail" - it may be of use to some.

IMHO, support and resistance is probably the most important thing to learn about trading along with risk/money mgt.

Cheers

Support and resistance levels are closest to being called holy grail in forex trading. If you trade near these levels especially on longer time frames you can get amazing results all around.

+1

Hi trading-kid,

I'll try to give you the most unbiased and accurate reply I possibly can although many have already given you pretty good replies. Maybe mine can get you to think about the deeper aspects of price structure.

Many here on FF would probably disagree with me, but this is based on my understanding of market microstructure and price dynamics utilized mainly on the academic and institutional level. First, I want to say that support and resistance is far from the holy grail in trading. In fact, if you were a patient trader, didnt have to trade every day, and were really good at reading the markets you could build a strategy based solely on a naked price chart and key fundamentals with some insane numbers (think win ratio of 70-90% and R/R 3-2:1, even higher R/R if you took the longer-term macro route). I've never met a sole support/resistance trader ever achieve near those numbers because markets are not moved by support/resistance. They are moved by ORDER FLOW. The only reason price respects support/resistance or any other TA concept is because traders input orders based on these concepts which causes price to respect them. That's why technical analysis is called a self-fulfilling prophecy. The big guys who play a major role in price moves are more concerned with what the macro situation is like rather than buying each support and selling each resistance.

That doesn't mean support and resistance isn't important and I use them every day in my trading. I think the more accurate phrase would be that support and resistance is the holy grail of technical analysis. The reason being is that although you can find traders on the institutional level using fibs, pivots, etc. one thing that is universally accepted is support/resistance. Almost all traders have the key S/R levels noted and banks even send out key levels to their clients. So we can agree that support/resistance levels are important, but trading them is a different thing.

Most traders, like you, find themselves stuck when searching for which levels matter and which don't. Sometimes you'll see price bouncing each time it comes near a level, and yet sometimes price breaches it with ease. You can never know how weak or strong a level is because you are not a tier 1 bank with access to the Interbank order flow, but there are some ways you can higher your probabilities of guessing whether a level will hold or not.

First of all, the higher the time frame, the stronger the order flow at key levels because more market participants will be trading them as you go up time frames. So a daily support level will have more orders clustered there than would an hourly support assuming sentiment is the same. That's why you see the replies saying longer time frame levels are more important, it's because they hold more weight. The big guys who move price trade higher time frames so it's a given that higher time frames are immensely more important compared to the short-term levels. If you traded just these levels, your performance would be much better compared to trading all levels.

Another thing that could really help your probabilities is when price reaches a level, ask yourself what is the current short-term sentiment and long-term sentiment? Is there a good reason for traders to enter orders here that would support a bounce from the level? Has the market priced in/discounted any important news? Is there any reason for this level to not hold? It's hard to explain reading sentiment and it's something you just sort of develop after watching price and reading news for a while. Intraday support/resistance levels can be breached for any number of reasons such as filling a large corporation order, and therefore is less predictable although I wouldn't necessarily say it's unpredictable and you can still trade it. News is usually the reason for more important key levels breaking. It could also be a market squeeze or massive profit taking, but it is usually news related.

Lastly, you can watch how price reacts to a level and wait until you have confirmation. I'm not talking about seeing a pin bar or a heads and shoulder pattern. I'm talking about a different kind of pattern in which you just watch price and see the story playing out. You need to actually read the buying and selling pressure the price action is showing you. For example, say price comes to a support level. As it gets closer and closer to the level, does each drop down get weaker in momentum? Are you seeing price bounce off of the level multiple times signaling it could react to it? As price bounces off the level is it stronger and bouncing faster off the level than it does on its way back down to it?

Keep in mind that as strong as your analysis is, a level may still break whether that's due to you being wrong, a stop hunt, news, or markets just doing whatever they want. Like you said, nothing is 100%

Also, keep in mind that there's a common misconception saying that the more times price reacts to a support/resistance level, the stronger the level is. This is actually not the case because the more price reacts to a level, the more limits it eats up and the more stops that grow on the other side. With the limits getting smaller, stops growing, and market orders exhausting, a breakout is inevitable.

You could also add confluence in your toolbox if you wanted. A strong confluence at a support/resistance level will hold more order flow and therefore have a higher probability of a reaction.

I personally only mark 1Hr and above support/resistance levels as these are the most important. Although I do use intraday levels, they don't really play a big part in my entry other than trying to read whether the bulls or bears are stronger.

Sorry if my reply sounds confusing. It's hard to explain clearly in one post with no examples and it's just something that develops over time with the right knowledge and enough experience.

Wish you the best!

I use: Bollinger bands, Alligator, Fractals (exactly for sup & resist levels) and ADMI. Sometimes Fibonacci grid... that's all

Yup, working on the supp and resistance is as close to the holy grail as we are ever going to get..

Hi all, thanks for sharing your opinion with me. My head was just messed up with some (un)finished and (not)working ideas.
Now i trade with a supdem indi and mark support and resistance at d1 4h 1h.

Second thing i am curious about is, how do you look to trend direction? 99% of indicators like ma and rsi dont work in my opinion because they are lagging. So do you look at trend lines? Fundamentels? Or broken supdem?

Thanks all,

Greetings tk

Hi Trading Kid,

You're welcome to have a look at this thread which is describing how I go about trading off major S/R areas. I've currently got a live trade example on the go and posting charts as I move through trades.

http://www.forexfactory.com/showthread.php?t=551541

Cheers

Support and resistance are the underlying basis of almost every significant trading decision I make with almost every system and method I routinely trade. They're real and objective and significant.

I endorse the recommendation for the thread mentioned just above in which Pharley describes how he uses S/R levels.

i am doing some confluence trading now so the levels are stronger for sure. it works fine for me. going on to the next chapter now.. emotions, step by step, every day better skills

I love using Support and Resistance in my trading, granted I'm still relatively new in trading, but I do find this way, one of many out there, helps with my trading. Usually at the beginning of the week I take a look at higher time frames and just mark levels that are useful in the vicinity of current price. I use the Stochastic indicator to spot divergence and a few moving averages on the charts too.

I have read all the replies and am taken in by many of them, it shows that there are many opinions out there as to how to set up your own trading strategy. Non are never 100% right... though some are definitely better than others.There are one or two things I would like to add taken from my personal system and method.
I have learned not to look for tops and bottoms as entry and exit points. I seek good entries by using non repainting indicators and some good R&S levels set up on Day charts and taken back to my preferred trade entry chart the tf 1Hr. Using indicators as mentioned I will enter after the move has started and will exit before the move has finished, often leaving many pips on the table. But as my good Indian friend said to me - a small profit is better than no profit, and the beauty about a small profit is, that even with small profits you can't go broke.
My object has never been to take the full load, but rather a slice in the middle - this reduces my bad entries and losing trades substantially.
There is another point I want to make, and that is that I NEVER set a daily target, inevitably one has not reached the target an hour or so before packing up time, and you begin to look for trades and will often take risks to try and make target, this can lead to some big losses.
Lastly, and this is good advice from lessons I have learned during my 20 odd years of FX trading... Don't use an EA, the only person that will make money from these are the people that sell them. If you are going to be a trader - it is a full time job at your computer.. use a good system and listen to it sending you an audio alert - when it does - don't enter immediately, see such signal as a warning that there MAY BE an opportunity. Investigate before entering!