Support and Resistance

[myownceo727]

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

 

[bbmac]

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

 

[barjon]

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.

 

[bbmac]

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

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.

 

[myownceo727]

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!

 

[Enzzo]

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!

Set the order and leave the trading station... :cheesy:

 

[Enzzo]

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.....

 

[myownceo727]

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.....

ENZO what kind of money management are you using!

 

[Enzzo]

ENZO what kind of money management are you using!

Simple enough...
I just risk a % of my acc per trade that varies generally between 2 fixed values like 1-3%, as an example

 

[myownceo727]

Simple enough...
I just risk a % of my acc per trade that varies generally between 2 fixed values like 1-3%, as an example

Do you have a Skype Id like to discuss methodologies with you Its always nice to have traders to bounce ideas off that trade in the same manner!

 

[PATrader]

Support and resistances are just guides, footprints left behind by the market. You can most certainly take bets at those levels, however, the more conservative and safer way of trading at these levels is always to wait for confirmation of whether the bulls are winning or the bears are.

 

[myownceo727]

Support and resistances are just guides, footprints left behind by the market. You can most certainly take bets at those levels, however, the more conservative and safer way of trading at these levels is always to wait for confirmation of whether the bulls are winning or the bears are.

@PAT what do you use for confirmation? Could you explain your process

 

[rathcoole_exile]

Do you have a Skype Id like to discuss methodologies with you Its always nice to have traders to bounce ideas off that trade in the same manner!

i thought that that's what T2W is for ?
Why you wanna sneak off into the corner whispering amongst yourselves ?

 

[myownceo727]

i thought that that's what T2W is for ?
Why you wanna sneak off into the corner whispering amongst yourselves ?

because i prefer to talk live when i talk to people i like to get into detail and replying or a forum can take ages to get a full conversation

 

[rathcoole_exile]

So you seem not to be bothered that the rest of us may miss out on the pearls of wisdom that are discussed ?

 

[myownceo727]

its not that but simply ad me on skype if you think theres some knowledge you may be missing im not sure why you seem to be taking this personal but its not about that at all I learn better one on one i lose focus on a forum setting and ive had a bit of trouble learning from post alone I NEED follow up so I do it my way because it works for me doesnt make much since to start a post that wouldnt work best for me

 

[bbmac]

PATrader's post number 11 on this thread sums it up really but there are other techniques you can add to price action that can give for eg you an earlier indication that a support/resistance/sbr (support becomes resistance) / rbs (resistance becomes support) zone has a greater probability of holding than not (ie a bounce not a break,) by dropping down to lower t/f's thatn it ocurs on - and these can include repeating patterns comprised of price action itself and tech indicators.

The example below shows a pre-identified previous 4hr/1hr swing hi I had marked as potential rbs, ie a previous near-term obvious 4hr fractal price swing hi co-existsing as a previous near-term obvious 1hr fractal price swing hi (circled) there was also a 23.6% fib retrace of one of the major swing low's on this 1hr t/f to the prevailing highest point from where price had pulled back, and a 3rd party market info vendor was suggesting bids in this area were likely.

The chart below shows the lowest t/f that I could sensibly use to enter at that area of potential rbs/support confluence - the 1min and you will see it was a proprietary pattern comprised of a classic price action reversal candle itself as the trigger for entry at it's close, and a repeating pattern of regular bulllish divergence plus a repeating pattern of bollinger bands that told me something about volatility - all of which combining to make a full repeating entry set-up that gave me the confidence to enter on a t/f so far removed from that the potential supp/rbs had been pre-identified on. . You will see in the dilaogue box on the 1min chart below that it refers to supporting other such repeating patterns on a higher t/f and these supporting potential repeating patterns (potential as opposed to absolute like the 1min because at the time of the 1min candle trigger close they obviously were as then unvalidated by pa as the final piece of the jigsaw in those repeating patterns,) /set-ups on a higher t/f (s) can add confidence to the early entry on a t/f below that the potential support/rbs was identified on.

You will see from the 1hr chart posted firstt that a pinbar-esq candle went on to develop on that t/f off the potential supp/rbs but as this example shows there are techniques you can add to PA itself that can make a much earlier entry a high probability for pip gain too on t/f's seemingly a long way off that of the potential supp/res/sbr/rbs.

Jut some other techniques...there are more.

G/L

 

[bbmac]

Another point to make is that not all potential support/resistance factors are created equal or at least I should say probably more accurately not all confluences of potential support/resistance factors are as historically strong (ie the greater probability being for a bounce than an immediate break) as others over any given sample. Returning to the 1st point and as a very simple example I bet that if yoiu had a sample of say 500 previous near-term obvious fractal price swing hi and lo's on 1hr and instances of price approaching any given m.a. the former would see more bounces (howsoever long for) than the latter.

Context is important too -for eg in a strongly trending market (nowithstanding the above) are you more likely to buy support or sell it ?

G/L

 

[samtullett]

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

Wouldn't volume be an important one?

 

[forker]

Bbmac, your charts are like Heathrow during the Olympics