Beginner - Support / Resistance Question

[Tommygun66]

I think our examples match, I was just showing the opposite side (the buy). I think. :$

 

[MajorDutch]

its broken through just waiting for the retest.

 

[trader_dante]

Some interesting thoughts.
Please could you clarify "The golden rule is SELL rallies into previous SUPPORT. BUY dips into former RESISTANCE."?
I don't understand this; surely when something is rallying (ie going up) you don't sell it and it is going to encounter resistance, not support anyway (unless there is a historic established support line). Same for "buying dips". Thanks.

When something is rallying I sell into former support (now expected to act as resistance). The same goes for something that is dropping. I buy former resistance (now expected to act as support).

Here is a recent example in UTX.

Almost every single trade I take is against the short (and sometimes medium) term trend but often into a higher TF trend.

I think this is one of the most misunderstood elements of trend trading. Trading with the trend is not enough ; you have to know how to FIND the trend.

 

[scose-no-doubt]

Sounds like you're thing to FIND £80pcm from this geezer.
Welcome back btw

 

[forker]

Maybe give him a credit crunch deal. 49.95

 

[trader_dante]

Sounds like you're thing to FIND £80pcm from this geezer.
Welcome back btw

Nah, if I was trying to do that I would be saying "there's this really profitable way of looking at S/R that I can reveal for just..."

 

[Jason101]

Hope to see lots more posts from you now Dante

 

[Bint_Crusher]

I use different time frames depending on the trade in question, but for most trades and especially for those based on support or resistance I use daily time frame (or hourly zoomed out). I expect to see the support or resistance to have held at least twice before; I wouldn't use a "support" line from a 10 min chart for example, I know that's just noise.

Timeframe aside this is a massive massive massive massive massive forken huge mistake. Take the first pullback only or at worst the second. You will lose if you keep with your current strategy of waiting for at least 2 tests and taking the third or fourth. :smart::smart::smart::smart:

 

[Tommygun66]

Bint-Crusher - thanks, but can I ask why? When I made that comment I meant the the S/R had to be well established for me to try and trade it. Someone else on this thread have said that's a mistake too, which is really quite confusing as it's the first tip most books/traders give when teaching people technical analysis.

Also, when you say "take the first pull-back only" surely you can only know it's a pull-back from an established S/R?? What am I missing?

Finally, as an interesting example the £/$ literally bounced off the 1.5350 line yesterday, the same big support line that held up twice in 2010. What's the error here?

Thanks,

 

[forker]

Also, when you say "take the first pull-back only" surely you can only know it's a pull-back from an established S/R?? What am I missing?

Thanks,

The more obvious the level the less chance of it working.

 

[TheRealMrT]

Bint-Crusher - thanks, but can I ask why? When I made that comment I meant the the S/R had to be well established for me to try and trade it. Someone else on this thread have said that's a mistake too, which is really quite confusing as it's the first tip most books/traders give when teaching people technical analysis.

Also, when you say "take the first pull-back only" surely you can only know it's a pull-back from an established S/R?? What am I missing?

Finally, as an interesting example the £/$ literally bounced off the 1.5350 line yesterday, the same big support line that held up twice in 2010. What's the error here?

Thanks,

Think of it like attempts to get through that level.
It bounced down from 100, so it makes another attempt to get through it 12 hrs later (or whatever chart you use), you short this from 100 and take a small trade. On the third and 4th attempt it is showing you that price really wants to retest it again, subsequent retests have much more likelihood of breaking out especially 4th and 5th. The 3rd retest, well you could still short that but it's not as good as the 2nd. Every retest makes the line weaker.

 

[Tommygun66]

Good point well made
Thanks

 

[dazzer_fx]

Nah, if I was trying to do that I would be saying "there's this really profitable way of looking at S/R that I can reveal for just..."

I just don't get this, why every time Dante makes a contribution does somebody eventually
come along and make a snide comment. Do they think that others think they are clever
and funny by making these comments? Its so boring, give it a rest.

 

[forker]

I just don't get this, why every time Dante makes a contribution does somebody eventually
come along and make a snide comment. Do they think that others think they are clever
and funny by making these comments? Its so boring, give it a rest.

Boring, nothing about this place is boring. Are you a multi nick by any chance.

 

[dazzer_fx]

Boring, nothing about this place is boring. Are you a multi nick by any chance.

So anyone that critises one of the boring idiots on here that think all
vendors are the devil reincarnated are multi nics? Here we go, same
old argument, yes very boring.

 

[forker]

Best be on your way then

 

[dazzer_fx]

Best be on your way then

Yawnnnn (yawning while making the hand getsure in your photo)

 

[forker]

Need some KY!

 

[MajorDutch]

First off, a single previous swing low or high is NOT to be considered as S/R.

This is a gross generalisation and utter bollox. Edges come in many forms.

 

[forker]

Another boll0x is choosing the pinnacle of a swing as a level. 5 times out of 10 it's an overshoot