Quote:
Originally Posted by John P.
1) sounds like you will mark up any potential/promising area for later confirmation? This is turning into a bit of a problem for me. I dont have any issue identifying "areas of potential interest," but I do with weeding through them.
2) on your chart series, middle pair -- EJ 4H, lower of the upper two lines of resistence, where price touches in the middle, purple block. Price scoots up to an area of oversupply and goes quickly screaming away. In your example, of course, its twice more confirmed to make it all the stronger.
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1) If you're experiencing some initial frustration in getting to grips with the concept of identifying & acting on your interpretations of this type of trading activity then strip it back a little further & simplify it until you become more aclimatized with it.
I'll assume you're more intent on trading via a shorter timeframe framework? (generally more intraday or short visits to the market?). If so, then drill a little closer into the action than a daily template.
Try observing the price & levels on a 60 minute chart. On a half decent chart package, that should offer you between 2 & 4 weeks of activity.
You're looking to see if prices got rejected quickly or fiercely from a key level, or whether they form a small base or ledge from which price gets booted.
These are the area's where you need to plot your s&r zones. Similar to those posted recently by Tess.
You've already described adequately enough what's occuring when price moves quickly away from a level & revists it for the 1st time. The imbalance or equilibrium (whatever you care to call it) quite often attracts price back for a second look.
It does that for a couple reasons. Usually because stops or limit orders require to get shuffled thru the order book and/or buy & sell stop orders get fired off & attract speculative players as price moves aggressively away from a level. Buyers (sellers) remorse can often set in, or counter stop activity kicks in, forcing price back from whence it came.
If the move is genuine enough, you'll then witness the move unfold again (the original move away after the pullback), which is why these s&r zones Tess marked up nearly always work out positively.
But drilling in a little closer might help in eliminating some of your cluttery type lines on your chart. If the 30m or even the 15m highlights this type of activity, then by all means plot the action on those also. You don't always require a Daily or 240m perspective to profit from the intraday-intraweek momentum moves.
2) Absolutely, but remember - s&r (or supply-demand) isn't an exact line or precise level.
Try get into the habit of allowing a little tolerance above & below a key level or flip zone. By all means plot a line thru say 163.50 or 1.9975 if that specific line flips price from support to resistance or vice versa, but try identify a small group of 5 or 15m bars which mark up equilibrium & observe how prices react when they move away from that level....was it a lazy, lethargic move or an aggressive, sharp push up/down?
Watch price as/if it revisits & see how it reacts as it approaches & vibrates around this short-term s&r zone.
I think you'll benefit from drilling in a little closer & focusing on what is doing NOW rather than what it did 3 months ago.
Try it out & see how you get on....we'll try post up some examples as they print out as they set-up as & when we get time, to assist explaining what we're talking bout.