Help identifying Support and Resistance

[Stylez777]

Hello everyone,

I am in the infant steps with learning technical analysis. I started with trying to recognize Support and Resistance and how to properly draw the lines on the chart. I have been watching videos, webinars and reading on this topic and I am unsure if I am doing this properly. I was hoping the community could take a look at the 2 charts I tried this on and provide me feedback about how I did with finding and drawing S/R.

Did I get it right? Was I close? way off? What the heck did you do you crazy bugger, go back and get more help!!

any input, help or advice is greatly appreciated!

 

[timsk]

Hello everyone,

I am in the infant steps with learning technical analysis. I started with trying to recognize Support and Resistance and how to properly draw the lines on the chart. I have been watching videos, webinars and reading on this topic and I am unsure if I am doing this properly. I was hoping the community could take a look at the 2 charts I tried this on and provide me feedback about how I did with finding and drawing S/R.

Did I get it right? Was I close? way off? What the heck did you do you crazy bugger, go back and get more help!!

any input, help or advice is greatly appreciated!

Hi Stylez777,
Welcome to T2W.

In answer to your question - it's hard to say. You need to pan out much further to include a lot more data and then S&R will shout out at you/us. As it is, it's hard to see the wood for the trees.
Tim.

 

[Stylez777]

Hi Stylez777,
Welcome to T2W.

In answer to your question - it's hard to say. You need to pan out much further to include a lot more data and then S&R will shout out at you/us. As it is, it's hard to see the wood for the trees.
Tim.

Tim,

Thank you for the reply. How many days on the chart would you need to see? From the information I have gathered on S/R it had said you could go back 7 days, 3days or even less to be able to find those levels. I am new so I don't want to presume what I have been researching on the topic was right or wrong, only trying to ask and learn.

I attached a full 30day 1h chart for both below, is more info still needed? am I miss interpreting something?

 

[timsk]

Tim,

Thank you for the reply. How many days on the chart would you need to see? From the information I have gathered on S/R it had said you could go back 7 days, 3days or even less to be able to find those levels. I am new so I don't want to presume what I have been researching on the topic was right or wrong, only trying to ask and learn.

I attached a full 30day 1h chart for both below, is more info still needed? am I miss interpreting something?

Hi Stylez777,
That's more like it!


You've picked two biotech giants - so their respective charts are strikingly similar. Is this deliberate and part of your trading strategy? If not, I suggest you pick one and trade that - as the other one is likely to move more or less in tandem.

Regarding your S&R levels, broadly speaking they look fine to me. There are a few lines where it appears you've been unable to decide whether to draw them at the candle high/low - or at the body open/close. If you think of S&R as being a zone - as opposed to an exact price level - then you can draw lines that look right, but don't necessarily coincide with exact points on the candle. Some people even draw really thick lines and watch for activity in their general vicinity. Other than that, personally, I find the vertical stripes visually very intrusive and I think the picture would be clearer still without them.

The bottom line is: if the levels you've drawn are important and meaningful to you, don't change them on account of what I or anyone else says. Ditto for the vertical stripes!
Tim.

 

[Shakone]

Stylez, what are you expecting from these levels? A quick bounce? An area that shouldn't get hit? A place where there will be a long lasting reversal? A place where if broken, price has indicated clear direction?

I think where you plot these lines depends on what you're looking for.

That said, once you decide what it is that you're looking for, there is something better than anyone here to tell you whether it is right or wrong, and that is what the market did when it met your level. Miss Market, best guru there is.

 

[timsk]

Hi Stylez777,
I concur with Shakone's post - excellent advice, IMO.

If you're struggling to decide where to draw your lines, then a rule of thumb is that if it's not obvious to you - then don't draw it. Something you may find useful is to look at point and figure charts or Renko charts. S&R levels are much easier to see and draw on both types of chart - by virtue of their construction. Attached is a Renko chart of CELG with S&R levels shown in blue - each red or green 'brick' represents a movement of one dollar in price. Here's a link to explain what Renko charts are and how they're constructed: StockCharts
Tim.

 

[Stylez777]

timsk and shakone,

Thank you both for taking the time to reply.

The vertical line sin the chart annoy me too. I've been looking how to get rid of them but haven't been able to find it. I should Google that! lol

I had no specific reason for picking those charts, they just happen to be on a ticker I saw and I decided to use them as practice to draw S/R lines to try and see if I could pinpoint areas.

I have not developed a trading strategy or following any set strategy as of yet because I am still trying to learn the basics of how to spot S/R, how to draw the lines, how to draw trend line etc. I feel I need to know all of this before I can even begin to understand how to formulate a strategy or move onto more advanced indicators that people use such as fibonacci numbers and such.

I'm still in the learning stage, so it's all trial and error for me. I just wanted to make sure that I wasn't way off the mark with taking what I've learned and trying to put it into practice myself (also want to make sure what I was learning wasn't wrong either lot of bad information out there or so I have been told).

 

[Lands_end]

Hi Stylez777,
I concur with Shakone's post - excellent advice, IMO.

If you're struggling to decide where to draw your lines, then a rule of thumb is that if it's not obvious to you - then don't draw it. Something you may find useful is to look at point and figure charts or Renko charts. S&R levels are much easier to see and draw on both types of chart - by virtue of their construction. Attached is a Renko chart of CELG with S&R levels shown in blue - each red or green 'brick' represents a movement of one dollar in price. Here's a link to explain what Renko charts are and how they're constructed: StockCharts
Tim.

View attachment 173064

Do not under any circumstances follow this advice. Learn to recognise price action on a chart and draw support and resistance lines on that basis. It doesn't come easy to everyone but persevere and you will satart to see the general picture after a bit of backtesting. Going to P&F charts or renkos at the outset is a certain loser.

 

[NVP]

the main thing to remember is that S & R points should leap out of the chart at you ...........................if they are not then they are not prime S/R levels and just minor levels

N

 

[Lands_end]

the main thing to remember is that S & R points should leap out of the chart at you ...........................if they are not then they are not prime S/R levels and just minor levels

N

To add to NVP, start with a higher timeframe such as a weekly , draw in the extremes of price then reduce it to a daily. When you see your levels line up then you have a starting point to go on. Also, record price levels in a journal, that way you can commit figures to long term memory.

 

[timsk]

Going to P&F charts or renkos at the outset is a certain loser.

Hi Lands_end?
If you're going to instruct the OP to ignore my advice (or anyone else's for that matter), it would be both helpful and courteous if you went to the trouble to explain why.

P&F and Renko charts display price action perfectly. That's precisely what they're designed to do and, by removing a lot of 'noise', it makes them the ideal charts for newbies to study.
Tim.

 

[Lands_end]

Fair point timsk, In my view everybody should be able to read black bars before even considering a trade. It's the difference IMHO between learning to drive on an automatic and a regular stick shift. It is the capability to sift through the noise that increases the chart or price awareness. To start using an aid such as P&F is in my miserable view creating a false illusion.

 

[timsk]

Fair point timsk, In my view everybody should be able to read black bars before even considering a trade. It's the difference IMHO between learning to drive on an automatic and a regular stick shift. It is the capability to sift through the noise that increases the chart or price awareness. To start using an aid such as P&F is in my miserable view creating a false illusion.

Hi Lands_end,
Thanks for the explanation. I hold the polar opposite view to you: I'm the tails to your heads - the white to your black - the yin to your yang etc.

If the OP struggles to identify S&R levels of a Renko chart - he's never going to find them on a bar or candlestick chart!
Tim.

 

[develbis]

price proxy

price proxy
might help
might not

http://www.trade2win.com/boards/trading-systems/28101-three-keys.html