How do you draw your S/R zones?

Ok, I’ve been using my own methods in placing Support and resistance lines. Importantly, I only use them as part of my analysis. So for example. If I expect some very important news at 3pm later in the day and I believe that it will push a pair up, I might then use a support line just below the price as an entry point. There are times it never touches the point, times it passes right through (and takes a stop loss) and even times it has just touched the entry point with 1 or 2 pips move past then rallied up 120 pips! The important thing is that I only used as an extra part of my total analysis, combined with my other analysis, which includes trends (MAs, Ichimoku Kinko Hyo, etc) and ranging analysis.

For example, I look mostly at the 4 hour and 1 day charts (I also look at weekly and monthly). Taking the daily chart of the EURUSD, I often open the Stochastics indicator and use it’s highs and lows as important places to place the tops and bottoms of the support and resistance. This can also be done in the 4 hourly charts too. My method is shown in the chart below:



Here you can see where I have placed the orange support and resistance lines (S&R). I have drawn perpendicular lines to show where the S&R lines have originated from the stochastics. I also use Fibonacci to draw support and resistance and I will lend extra weight to S&R where they overstack each other. For example, recently there was major resistance around the 1.07 mark from the 31 March to around 7 April. Prices where trapped in the range between 1.07 and 1.063. Both these where between price highs and Fib levels, showing where there was strong support and resistance, with a breakout just after US jobs report. I find news often the trigger for range breakouts. In this instance I studied the news, the trends (it was in a daily range with weakly positive trend starting - in my analysis). I expected the price to rise with a -ve news outcome. Even though I was correct with the news expectations, the market still turned against me. I believe the buyers just ran out and sellers took the steam. So this is part of how I use S&R, but I use other tools to aid my analysis that I have not shown here.

Another place I put S&R is where there have been repeated lows or highs created one after the other. An example is the one above and between 16 February and 16 March. This should turn out to be a very important resistance line again should the price drop to this level, as even big banks will use this resistance line at around 1.05.

One last thing I do, I draw small areas or rectangles instead of lines, as the price often touches in mirco ranges instead of definite lines.

Like others have said, it is down to individuals how they come up with support and resistance. I use stochastics and fibs to help create mathematical or concrete lines, but I still use discretion, as my chart also shows where I have not placed lines even though the stochastics have turned.

How do you find the accuracy of Fib Levels?

Personally, I can’t use them as they are at best guess work, typically used to project future levels of interest. Should enough of the [I]crowed[/I] also believe in these fib levels then you may well see a reaction within price movement.

Although I understand the mathematics behind Fibonacci and it’s applications, it’s fair to say that these projected levels provided by drawing Fibonacci are ‘hopes’ that a formula will somehow produce profitable results. They are very much subjective, nothing [in my opinion] beats drawing real S&R levels that price has historically produced - this is after all the real deal, and not subjective like that of Fib levels.

To apply extensions of 38.2% and/or 61.8% to a chart in the hope that this is a turning point in price seems a little unrealistic, or unrealistic when considering long term success.

I admit that there have been times that I myself have seen price follow Fib levels to the rule, and it’s an interesting observation. However, it can’t be forgotten that Fibonacci is ONLY a self-fulfilling prophecy: [I]“a prediction that directly or indirectly causes itself to become true, by the very terms of the prophecy itself, due to positive feedback between belief and behavior.”[/I] Which translates to; “if enough traders believe in a certain fib level applied to a price chart, price will react as expected”

Frankly, I don’t use any technical tool for identifying valid support and resistant points of Forex market, I use manual strategy by using horizontal lines; even sometimes I use trend line for dynamic support and resistant levels! I have seen, higher times are more powerful and valid on this identifying issue; D1 is my favorite time frame for all kind technical analysis!

I am also like with simple way, look on daily timeframe as trigger to draw line to predicted on support and resistance area, and then going to H1 to analyze current trend, will open trades following current trend with short term trading plan or sometime as swing trading plan

I agree with you. I use them as general support and resistance levels [I]combined with other analysis[/I], but I add prominence when the fib levels are at or very near other support and resistance levels such as previous highs or lows. I don’t act on them alone. For example; I might use and ADX and Bollinger bands to find that the market is in a range. Then I might decide to use a stochastic, if the stochastic is overbought and the price is just above or moving down towards a 50% fib support level that also happens to be close to a previous low I would consider I have more odds in my favour and would be inclined to place a buy limit at that price. However, if the ADX and bolligner bands indicated a trending situation and the price was moving down, I would likely completely ignore the fibs entirely. I would rather wait till I got some sort of confirmation of the trend ending or even short the market, expecting the price to continue to crash through support levels. Again I always use stop losses. I’d like to add that I do frequently lose on these trades but I have my money management principles I also use and has kept me in good stead.

Again I agree with the good old drawn S&R levels based on history and use them extensively. I just find sometimes using a system to help draw historical supports stops me from seeing too many supports and resistance. I try to find ways of finding the important ones. The same applies to drawn support and resistance and fibs. If enough people are using them it produces a self fulfilling prophecy. If 30% of the market draw support from previous lows and another 30% draw supports from fibs, then when a fib and previous low are aligned it means that 60% of the market may be looking at the same support and resistance level, increasing the likelihood of respect of that line. Again, why I look for more than one indication.

I’m done…

According to your contribution of providing a defenition; you never really started? So it’s ironic to now say that you’re done :wink:

You should be ashamed of yourself. There are people on here looking for proper guidance and you muddy the waters consistently. You must either work for babypips or babypips doesn’t have the talent to distinguish real traders from trolls. Its sad really. Maybe I’ll start my own forum one day. You’re welcome but these kinds of posts will be deleted. I feel sorry for you but at the same time your behavior makes me glad that you never made it… Now I’m done. :47:

This is a fairly ironic comment to make, artwilder, considering a member here asked how [B]you[/B] approach S&R, a member who is clearly new and looking for guidance. To which you provided a reply based on statistical significance of retracements; a reply from you that no one has disagreed with - but also a reply that you then shut down by admitting you would not go into any further detail. This is clearly your choice, but it also makes me wonder why you would half answer a question in the first place; this makes the water muddy, artwilder. Hopefully you can see this, now that it’s been pointed out?

Actually, in this thread alone I have provided guidance, and thought provoking comments based around Fibonacci. I’ve not provided advice, [I]just food for thought[/I].

I appreciate you feeling sorry for me to, maybe one day I will be able to make a living from trading, I’ve been on a demo account since I started in 2008 and have no intention to open a live account… :35:[I] for the non-native English speaking members here, this is known as sarcasm…[/I]

It’s a real shame that members here have to turn defensive when asked a question about a reply that they chose to make.

Best of luck artwilder - in perhaps not making the water [I]quite so muddy[/I] next time, and perhaps more importantly, not making yourself look [I]quite so silly[/I] by lowering the tone of a thread to derogatory comments towards myself, and the BP staff.

And what timeframe better to use for setting up the S/R levels?? H4 or D1??

Hello hafidfx,

There is no hard and fast rule, as i’m sure you’re starting to see.

However with that being said, a popular approach taken by many new traders is that of multiple time frame analysis (which in this case would be looking at BOTH H4 and D1 as per your example). In this case you would look for confluence (agreement) between both time frames.

For example, if you find a level of S/R on a 4H chart does it also agree with the same level on the D1 Time frame? It is [I]suggested[/I] that this gives a higher level of significance.

You don’t have to limit yourself to just the combination of 4H and D1 - although admittedly it is a good starting place.

Chill guys. :slight_smile:

I’m sure we all appreciate your above comment within the BP community - however you always seem to post one liners in many many other threads which are not intended to add value to the discussed topic?

This is of course fine as it is an open forum, although it would be great to get some real input from you which would benefit others too, perhaps?

I myself did try draw SR like b4. But im not good at it. So I have change my trading habits. I’m using SAR to spot SR. I love hunting reverse. For my trading strategy. The tread is finish when 2 last Sar is side by side. I’m using 10m. I’m a reverse scalper hunter. This strategy work for mi but may b a disaster to u. I won’t not even look at the chart if the Sar is far from the price. I will only start to focus when Sar is near the price. It will start to reverse when price is super near Sar n the last Sar is side by side with each other. And with the help of the ichimoku. I can know when price start to stop n reverse. As i not using normal Japanese I’m using heikin candle. It make me more easily spot the SR. Hope it help. Below is the live which I just screen shot it not a backtest . As im not intersted in back test cos back test is forever perfect. Hope it help.


Yes, finally! now we are talking :slight_smile:

Haha it not I don’t want. Just that some of the term u all saying is too deep for mi which I don’t understand. I don’t wan make a fool of myself which say something wrong. As im not high educated.

Ah don’t be silly, we’re all here to learn - nothing wrong with saying what you want to say.

Not being highly educated is a good thing, at least you can learn the right material rather than the already knowing the wrong material.

Good Luck.

Lol thanks jezzode

For me I also use BB. It was my support n resistance. It double confirm when price hit bb n over it plus Sar is side by side


For mi I don’t draw line beside I don’t know how to draw it well the other thing is also I feel price always changes each candle hv it own supports resistance. No matter how gd u draw it nv perfect. Tat y i use bb. It follows every single candle for support resistance.