Support and Resistance

This is a discussion on Support and Resistance within the Discretionary Trading forums, part of the Methods category; What signs can a trader look for to see if support or resistance lines will hold or fail ie order ...

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Old Jul 11, 2012, 4:04am   #1
Joined May 2012
Support and Resistance

What signs can a trader look for to see if support or resistance lines will hold or fail
ie order book, level 2? or is there something more concrete I can look for!

I do not really like indicators
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Old Jul 11, 2012, 8:50am   #2
 
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Re: Support and Resistance

If a market is strongly trending and blowing thru the potential support/resistance level respectively (for they are all potential) then the working assumption is that they probably will not hold until one does ...of course the greater the deviation from the atr of the instrument the more chance there is of such a level holding (howsoever temporarily) - remember that pullbacks from such potential supp/res levels are viewed as cheaper buying/selling opportunities 'with trend' by many. There are definately levels of potential repeating support/resistance factors that generally prove to be stronger than others over any extended sample and perhaps it is these levels and confluences of such that yuu should examine with the over riding working assumptiuon re trendingh and ranging markets ?. In a ranging market the potential supp/res level (s) generally have a greater level of holding - until they don't. (ie a b/o.)

There are no hard and fast rules but tools/studies as you suggest in your post above can help you as can others such as oscillator divergence and of course PA - price's reaction to these levels.

G/L
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Old Jul 11, 2012, 9:34am   #3
 
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Re: Support and Resistance

It's always pretty obvious on the chart whether s/r has held or not but in real time - where you're going to trade it - things are much less obvious.

Price sometimes "blows through" without stopping, but more often than not the normal price fluctuations leave you dithering about - it's holding, no it's not, oh yes it is, oh no it's not and so on - and the longer you wait for confirmation the more you are denting into the move you want to follow.

It's a bit better if you use an s/r zone where you can contain the "normal" (what's normal ) bobbing about, but at some stage you've just got to make an assumption about what it's going to do relying on your risk management to keep you out of too much trouble.
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Old Jul 11, 2012, 9:40am   #4
 
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Re: Support and Resistance

Hi Jon

This is true and in respect of PA being a guide at such levels/zones - each successivley higher t/f from that you use as your trigger sometimes confirms or not your decision to hold any poisition as a result of such potential supp/res to say nothing on the potential strenbgth of the factors you have nbotred that may or may not cause supp/res to occur there - based on large sample historical precedenec and of course whether the market onj the t/f's of interest to you is ranging or trending when such potential supp/res is tested by price. Order Book readers/Level 2 players may be able to determine the higher probability from their own analysis of such allied to subsequent PA ?

G/L




Quote:
Originally Posted by barjon View Post
It's always pretty obvious on the chart whether s/r has held or not but in real time - where you're going to trade it - things are much less obvious.

Price sometimes "blows through" without stopping, but more often than not the normal price fluctuations leave you dithering about - it's holding, no it's not, oh yes it is, oh no it's not and so on - and the longer you wait for confirmation the more you are denting into the move you want to follow.

It's a bit better if you use an s/r zone where you can contain the "normal" (what's normal ) bobbing about, but at some stage you've just got to make an assumption about what it's going to do relying on your risk management to keep you out of too much trouble.
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Last edited by bbmac; Jul 11, 2012 at 9:55am. Reason: typos
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Old Jul 11, 2012, 12:59pm   #5
Joined May 2012
Re: Support and Resistance

myownceo727 started this thread
Quote:
Originally Posted by barjon View Post
It's always pretty obvious on the chart whether s/r has held or not but in real time - where you're going to trade it - things are much less obvious.

Price sometimes "blows through" without stopping, but more often than not the normal price fluctuations leave you dithering about - it's holding, no it's not, oh yes it is, oh no it's not and so on - and the longer you wait for confirmation the more you are denting into the move you want to follow.

It's a bit better if you use an s/r zone where you can contain the "normal" (what's normal ) bobbing about, but at some stage you've just got to make an assumption about what it's going to do relying on your risk management to keep you out of too much trouble.

EXACLTY In hindsight support and reisitance are obvious i usually buy at s/r levels after previous s/r has been broken wit conviction but sometimes it fails I use a 2 point stop so sometimes that can hurt I've tried managing my stop but it turns out i do better just leaving it there because sometimes price comes with in 1 or 2 ticks of my stop loss and reverses its just nerve wrecking to watch!
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Old Jul 13, 2012, 2:28pm   #6
 
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Re: Support and Resistance

Quote:
Originally Posted by myownceo727 View Post
EXACLTY In hindsight support and reisitance are obvious i usually buy at s/r levels after previous s/r has been broken wit conviction but sometimes it fails I use a 2 point stop so sometimes that can hurt I've tried managing my stop but it turns out i do better just leaving it there because sometimes price comes with in 1 or 2 ticks of my stop loss and reverses its just nerve wrecking to watch!
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Old Jul 13, 2012, 2:31pm   #7
 
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Re: Support and Resistance

I agree....
I trade blind touches of S/R, but as you both are saying, you need to make an educated guess before putting your bets on the particular level, as not all the levels are equally created....
Each one have his own "rules" to do this, but definitively nothing is 100% right all the time..... so money management is there to cope with this loses.....
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