Closing prices as Support-Resistance

[jacinto]

Hi,

I am actually hesitant to open this thread, but here we go. I am actually at a crossroads regarding closing prices at "key" levels, and their implication for trading setups, and i just dont want to go reading books about it because i dont think i will find the answer (not that im lazy )

I trade FX, so no volume, and hence, just what price dictates. However, i am seeing that closing prices together with particlular type of bars/candles (prior and after the key close) are yelling support-resistance, or a start of a move.

So, instead of looking for answers in books, i thought that the answers of real traders would be a better way to getting there.

Anyway, I know its late. I will post a couple of charts tomorrow to show what i mean. Probably i am just seeing things develop in my charts, but hey, there is only one way to find out, and that is from the eyes of others.

j

 

[nine]

I used to trade quite a good end of day system that used that element Jacinto.

The rule was trend measured up, retracement in trend reached a certain momentum, buy when price rose above the close by a little over 1/4 ATR. The reverse applied to shorts. It was valid for commodity futures, financials and currency futures.

Hope that helps.

 

[senyorqueso]

Jac,

I was going to ask you about this on another thread as I've seen you using this, but now you've started a new thread on the subject I'll do it here.

Have to say it makes absolutely no sense at all to me, but that doesn't mean it's of no use

Highs and lows of bars makes a lot of sense, swing highs and lows especially - because this is where the masses like to leave their stops, giving the patient few ideal places to buy or sell in size, taking the other side of the flood of market orders that will trigger here. And as bars complete and some of those stops are trailed to the highs/lows of the most recent bar, the same applies, although to a lesser extent here.

But as for the closes of bars, i'm baffled as to why support/resistance might occur at these levels, unless they coincide with intra bar swings high and low, which you wouldn't see without looking at a shorter timeframe.

I look forward to seeing more chart examples of this happening, and some discussion of possible reasons for this...

SQ

 

[jacinto]

thanks Nine, may ask questions via PM if you dont mind. otherwise, probably you can post something about it here, if the method is not a state secret.

SQ, yes, i have to agree almost to each and every single word you write. Its just something i have observed, and i am really at a crossroads of my understanding of price action.

anyway, definitely will post charts, and hopefully others will join in. this is a topic where im just in doubt, it could just be simple coincidence, but hey, there is only one way to find out.

ah, and, i guess that for me, this thread will be active in the evenings not during the trading or childminding hours

thanks for your responses

j

 

[barjon]

jac

I think the closing price is important when it represents the end of a "genuine" trading period where traders' have closed their books (daily, weekly, monthly). However, fx is a 24 hour market isn't it (excuse my ignorance about fx) so that wouldn't apply so much.

Otherwise it's just the end of a slice of time and not very important in the overall scheme of things.

my twopennyworth

jon

 

[TheBramble]

Echoing Jon's sentiments in his post above, FX is slightly different given it's woolly 'session' times. But Close is more important than open, high or low for the simple reason other traders assign a greater importance to it, especially longer term traders.

The daily high low are considered ‘important’ and the 52 wk High/Low even more so, but these are just about the only non-Close measures that are.

The Close is as arbitrary a slice as any other jacinto, but it’s the most commonly used arbitrary slice there is, so I’d suggest you are on the right track, especially as you move out into the longer timeframes.

 

[hornblower]

thanks Nine, may ask questions via PM if you dont mind. otherwise, probably you can post something about it here, if the method is not a state secret.

SQ, yes, i have to agree almost to each and every single word you write. Its just something i have observed, and i am really at a crossroads of my understanding of price action.

anyway, definitely will post charts, and hopefully others will join in. this is a topic where im just in doubt, it could just be simple coincidence, but hey, there is only one way to find out.

ah, and, i guess that for me, this thread will be active in the evenings not during the trading or childminding hours


thanks for your responses

j

Hi Jacinto
I too have been looking at opening and closing prices, and support and resistance a good sign as to what is happening is to look for higher highs and higher lows , sign that its still going up , and reverse going down

but I just cannot give indicators yet !

 

[jacinto]

hi guys, thanks for all your replies. i thought i was asking an extremely silly question but was seeing those things in my chart and working in different ways on different timeframes to my surprise ....

even giving trendlines that once the move started, became support zones to swing lows....almost to the pip (coincidence or not, i dont know),

but hey: if it looks like a duck, just shoot. :cheesy:

I will post charts in the evening, and discuss properly. my trading time is limited by my kid, and i have missed the morning breakouts, so need to go and try to chase my food. lets see if the food doesnt end up eating me.

 

[nine]

I'd suggest trying the globex close time for forex as it certainly worked for forex futures.

Just my 2c.

 

[TheMoneyMachine]

jacinto

I concur with Jon because each time division (1M, 5M, 15M etc etc) is just a vertical representation of price action that occurred within that period. Also if your technical analysis platform clock synchronizes it's self with your machines operating system and your machines operating system time happened to be incorrect your closing prices may differ, would that make them less significant?

As Tony points significance is assigned to the closing price and therefore they become a self fulfilling prophecy more so the longer the time division.

Regards

TMM

 

[jacinto]

thanks for the comment TMM, I think i should rephrase my thoughts to make my ideas or my doubts clearer.

i agree with Jon and Tony, and with what you now mention.

i am putting a chart i just saw (i missed my trading time early, and now i am sitting on my hands, so a bit of time to monitor the pairs and look for turning points i guess ).

I am using this example such that it is a live probable case rather than reading a chart in hindsight. i dont know if it will be respected. Lets wait till the evening to see what happens. I will then post the chart and what happened after this snapshot.

however, this is it. 4hr closes (lines) and bars for EURUSD, (snapshot taken 5 mins ago)

 

[jacinto]

Hi,

I am actually hesitant to open this thread, but here we go. I am actually at a crossroads regarding closing prices at "key" levels, and their implication for trading setups, and i just dont want to go reading books about it because i dont think i will find the answer (not that im lazy )

I trade FX, so no volume, and hence, just what price dictates. However, i am seeing that closing prices together with particlular type of bars/candles (prior and after the key close) are yelling support-resistance, or a start of a move.

So, instead of looking for answers in books, i thought that the answers of real traders would be a better way to getting there.

Anyway, I know its late. I will post a couple of charts tomorrow to show what i mean. Probably i am just seeing things develop in my charts, but hey, there is only one way to find out, and that is from the eyes of others.

j

OK, I think i will need to rephrase this as I think i have not put my thoughts clearly enough and you guys have kindly answered to a topic that "has no shape" yet so to speak....(I still think I havent been able to do it yet, but well, fresh start). The next paragraph is not really a question or a statement, but a set of thoughts arising from seeing charts.

I am probably simply answering a question that can be answered without looking at closing prices, yet, i am seeing things in closing prices, in different timeframes, that suggest support and resistance, and i am not necessarily seeing it at the highs-lows, but after those hi-los form, close, make either a pullback, or keep moving, and for some reason, the "key closes" at "key levels" or within "particular candle formations" (are suggesting support resistance). these "key levels" can be swings, but also are, at times "pullbacks in a move" that only show as "swings" when you have a look at line charts.

Clearly, this has to be seen in the context of price action (be it with candles, bars, closes, etc.).

 

[jacinto]

i am putting a chart i just saw (i missed my trading time early, and now i am sitting on my hands, so a bit of time to monitor the pairs and look for turning points i guess ).

I am using this example such that it is a live probable case rather than reading a chart in hindsight. i dont know if it will be respected. Lets wait till the evening to see what happens. I will then post the chart and what happened after this snapshot.

however, this is it. 4hr closes (lines) and bars for EURUSD, (snapshot taken 5 mins ago)

OK, so this is how the chart unfolded. the close of the day should be considered, but guess that can be seen tomorrow.

when i posted the previous chart, i didnt mark the potential "support", so sorry. another example of what i mean. support to the pip.

I would like to be able to articulate my thoughts, but I cant at the moment.

 

[jacinto]

snapshot at 07:40 this morning. just to keep with the example as a live ongoing case until close of week.

again, i got no views, and i am not trading this pair at all at the moment.

added support lines in purple, in case move is down, see if it is respected or not.