How to know if a S/R level is going to hold or break | Forex Factory

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How to know if a S/R level is going to hold or break

  • #1
  • First Post: Jun 12, 2016 12:24am Jun 12, 2016 12:24am
Any professional trader wants to help me with this? I'm only about 60% right.
I know there must be better techniques out there,


Thanks.
  • #2
  • Jun 12, 2016 12:30am Jun 12, 2016 12:30am
Then how do you determine it hold or break during that 60% right?
The only winner is the one who survive the longest...
  • #3
  • Jun 12, 2016 1:19am Jun 12, 2016 1:19am
Quoting kinspk
Then how do you determine it hold or break during that 60% right?
I use basic instincts, but yeah, feels like i'm being stabbed when my prediction fails.
I just look at the charts from the left side and see if the level held before, and how fast the price is moving, when getting closer to a level.
It is not very logical... I know there are better ways out there.
  • #4
  • Jun 12, 2016 3:24am Jun 12, 2016 3:24am
Momentum is the key.
Decreased momentum as the S/R is approached indicates possible reversal. You might also see a divergence.
Increasing momentum at the level indicates probable breakout.
  • #5
  • Jun 12, 2016 6:33am Jun 12, 2016 6:33am
1. look at higher time frames
2. look at Dollar index if your trading a usd pair.
3. look at correlations with other markets.. Such as Dow, SPX, Dax, Oil, Gold, copper, hong kong, japan stocks
4. Time of day.. Asia pretty weak.. London a little stronger... USA/London overlap Very powerful can break levels easy
5. Data releases can break levels
6. Structure of the market above and below the S/R
7. Make sure your drawing s/r correctly
8. Is it the first retest of S/R or 2nd or 3rd.. Each retest level gets weaker.. Best is always first retest.
9. Quick spikes into a S/R = good.. Slow grinds into a level = bad.
10. Does price consolidate right below the lever for a few hours.. Usually not a good sign...
11. Look at other crosses of same currrency... If trying to short e/u you may want to look what e/j and e/a is doing...
12. Is it the beginning of a session.. or mid session when most traders are at lunch.. Most powerful moves happen near a session open and die out.

I hope this helps..
The only system that will work is one designed by and for yourself.
  • #6
  • Jun 12, 2016 6:42am Jun 12, 2016 6:42am
Quoting castaluna
{quote} I use basic instincts, but yeah, feels like i'm being stabbed when my prediction fails. I just look at the charts from the left side and see if the level held before, and how fast the price is moving, when getting closer to a level. It is not very logical... I know there are better ways out there.
None of the replies actually answered you. You contradicted yourself as well. Let me give u an example.

(1) Your R is 1.1300, it went up to 1.1305 and come back down, do you consider a break or hold?
(2) Your R is 1.1300, it went up to 1.1330 and come back down, do you consider a break or hold?
(3) Your R is 1.1300, it went up to 1.1360 and come back down, do you consider a break or hold?

Different kind of traders will give you different answers, and you will end up just confusing yourself.If I am a short time frame trader, I will said all broke R. If I am a long term trader I said it hold. You need to determine your own benchmark.
The only winner is the one who survive the longest...
  • #7
  • Jun 12, 2016 6:58am Jun 12, 2016 6:58am
Quoting castaluna
Any professional trader wants to help me with this? I'm only about 60% right. I know there must be better techniques out there, Thanks.
Well, it's a lot more involved than just only this my friend. As kinspk says it depends on what trader-type are you. Furthermore, there are plenty of pros out there but aside from any method, one of the major factors in trading is psychology (estimated near the 75% of the whole process) - as any trade we take is good/bad enough only till the next one comes in place. But, if you manage to get 60% winners CONSISTENTLY, I think it's a good outcome should you are capable combining it with efficient risk & money management.
Now, since I do not want to be accused an advertiser, shoot me a PM if you'd like me to give you a source with a lot of free material to study more about. From there then you'll decide if that trading style/method suits you or not.
  • #8
  • Jun 12, 2016 7:10am Jun 12, 2016 7:10am
Quoting GnWFx
Momentum is the key. Decreased momentum as the S/R is approached indicates possible reversal. You might also see a divergence. Increasing momentum at the level indicates probable breakout.
Quoting bloodpoodle
1. look at higher time frames 2. look at Dollar index if your trading a usd pair. 3. look at correlations with other markets.. Such as Dow, SPX, Dax, Oil, Gold, copper, hong kong, japan stocks 4. Time of day.. Asia pretty weak.. London a little stronger... USA/London overlap Very powerful can break levels easy 5. Data releases can break levels 6. Structure of the market above and below the S/R 7. Make sure your drawing s/r correctly 8. Is it the first retest of S/R or 2nd or 3rd.. Each retest level gets weaker.. Best is always first retest. 9. Quick...
+ sentiment built in the market

Actually it is like gamble, and for me the reason why I open my trade at s/r is to maximize the chance for a winning trade and minimize the risk.
  • #9
  • Jun 12, 2016 7:55am Jun 12, 2016 7:55am
S/R doesnt work because it relies on a specific line values, the market isnt perfect. Zones are better in my opinion. Your obviously having high leverage trades if your getting burned ( I know been there done that). Trading breaks/reversals, requires you to remember that 5 things can happen when price comes into these zones

Breaks
Reverses
Breaks-Fakeout-Reverses
Reverses - Fakeout- Breakout
Hovers.

At the same time understand the bigger picture, is the market in a downtrend/uptrend on the higher time frames ? Use Elliott wave count helps to determine this.

Personally being a short term trader, requires quick execution, for this to happen I have a time limit on my trades because I expect a quick reversal and for the market to respect these areas. The market has shown it doesnt always respect these areas. For example if the market doesnt have a nice pulse out of the zone within a short period of time the trade is closed. Ya it might actual eventually reverse but who cares ? It didnt do what you wanted it to do.

This also requires outlining what you expect price to do and if it doesnt, act accordingly.
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Learn, a forex trader must, unlearn and relearn he will.
  • #10
  • Jun 12, 2016 8:08am Jun 12, 2016 8:08am
Very interesting question. No bodies knows which fibs level gonna hold. But as a trader the good strategy is about finding which fibs level has the highest probabilty of being a strong support. Usually the fibs level that has a cluster of other supports other than fibs level has the highest probability. Because fibs level is only one method of finding the support are resistance. Other supports means - there are 4 dimesions in market analysis. Momentum, price , pattern and time. If you are hoping certain fibs level gonna hold, first you got to do momentum analysis. Check if the higher time frame is in uptrend or downtrend and look back in lower time frame ( daily- hr, 4 hr- 30 min)if the momentum indicator is changing direction from oversold zone in uptrend and vice versa. If it is, you just increased your probability of winning trade. Check if other supports level , like trend line, pivots, fibs alternate retracement level, extension level, or time retracement level falls around the near vicinity of your fibs level. You can check candle chart conformation too. Usually 50, 61 and 78% retracement level is very important level where usually the correction ends. Don't trade before 32 price retracement level unless the trend is very strong. If the trend is strong then something market goes sideways and start trending up. On these scenerio you have to be aware of time retracement. Retracement can be on price as well as time. Time analysis is the most important dimensions of all the other analysis which lots of trader ignore.

My strongly suggest you to read through the books by Robert C Miners. Its enlightening.
  • #11
  • Jun 12, 2016 8:45am Jun 12, 2016 8:45am
  •  regme
  • | Joined Mar 2010 | Status: Planning to be like Warren Buffett | 115 Posts
Quoting GnWFx
Momentum is the key. Decreased momentum as the S/R is approached indicates possible reversal. You might also see a divergence. Increasing momentum at the level indicates probable breakout.
Agree with GnWFx. Momentum is the key.
  • #12
  • Jun 12, 2016 10:53am Jun 12, 2016 10:53am
Quoting PeteTMagar
Very interesting question. No bodies knows which fibs level gonna hold. But as a trader the good strategy is about finding which fibs level has the highest probabilty of being a strong support. Usually the fibs level that has a cluster of other supports other than fibs level has the highest probability. Because fibs level is only one method of finding the support are resistance. Other supports means - there are 4 dimesions in market analysis. Momentum, price , pattern and time. If you are hoping certain fibs level gonna hold, first you got to do...

Thanks everyone for sharing some insights, my own methods are so primitive.... but it still manages to work. I guess i'll have to read more.
  • #13
  • Jun 13, 2016 2:44am Jun 13, 2016 2:44am
I just wait for a breakout, thats the only facts confirmation i got. Entry at pullback. Thats all..
  • #14
  • Jun 13, 2016 4:12am Jun 13, 2016 4:12am
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  • #15
  • Jun 13, 2016 6:33am Jun 13, 2016 6:33am
What i do observed is when price attempted too many times on those support or ressistance, its getting weaker. Below are the charts :

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When price in a rally mode, the best entry is wait for a pullback.

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  • #16
  • Jun 13, 2016 8:48am Jun 13, 2016 8:48am
Quoting batus
What i do observed is when price attempted too many times on those support or ressistance, its getting weaker. Below are the charts
Your S/R lines looks pretty neat. Is it an indicator?
Thanks.
  • #17
  • Jun 13, 2016 8:52am Jun 13, 2016 8:52am
Quoting castaluna
Any professional trader wants to help me with this? I'm only about 60% right. I know there must be better techniques out there, Thanks.

Most hedge fund managers are right about 50% of the time... (That's with 2 reward to 1 risk roughly) So if you are right 60% of the time then you are beating the pro's.
  • #18
  • Jun 13, 2016 9:35am Jun 13, 2016 9:35am
Quoting NaughtyPip
{quote} Most hedge fund managers are right about 50% of the time... (That's with 2 reward to 1 risk roughly) So if you are right 60% of the time then you are beating the pro's.
Agreed
  • #19
  • Jun 13, 2016 9:44am Jun 13, 2016 9:44am
Quoting castaluna
{quote} Your S/R lines looks pretty neat. Is it an indicator? Thanks.
Indicator just for drawing but it need to draw manually..sometimes im not using it.

Here's again when so many attempt on the support :

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  • #20
  • Jun 13, 2016 10:02am Jun 13, 2016 10:02am
Quoting NaughtyPip
{quote} Most hedge fund managers are right about 50% of the time... (That's with 2 reward to 1 risk roughly) So if you are right 60% of the time then you are beating the pro's.
So with that risk:reward they are like 75% effective by playing odds when the ratio is in their favor.
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