Hey everyone,
I’ve been reading all of Johnathon’s articles on his website and I’ve managed to get through the first 50 pages, and plan on reading more. I am glad I found this approach since it’s simple, and it fits my time constraints perfectly.
First question is I sometimes hear people saying “Don’t trade into lots of traffic”. Does this mean, don’t take a reversal if there are lots of potential minor resistance/support levels near by, making it hard to decide where price might struggle and thus where to take profit?
Second question I have is about pin bars. I sometimes see people taking pin bars where the small body is far from the key support/resistance level, however the upper/lower wick contacts the support/resistance level. I also see trades where the small body is AT the support/resistance level, and the wick goes well past the support/resistance level. Are both of these viable? I’ve attached a picture where the body isn’t near the support/resistance, but the wick touches.
http://forums.babypips.com/attachment.php?attachmentid=22201&d=1330068878
Third question I have is about support and resistance. I know Johnathon says to plot only 2 lines, above and below where price is at relevant support/resistance levels. It seems that for the most part people are using a couple months of recent data to look at support and resistance levels. However what if you see a lovely pin bar at a support level, but say 8 months back, there is a relevant resistance level that is close to your pin bar (say a little above it), would you still take the trade?
Basically what I’m trying to say is how relevant is support/resistance from months or even years in the past? If these support and resistance levels haven’t showed up as of late, however your price is approaching one of these levels, do you take this into consideration?
And my last question, I know this has been done to death, is how to you determine trend when you think it may be reversing? I know how to spot obvious trends etc, however what if there has been a slight uptrend, but for the last 15-25 days it has been in a down trend? How do you know if it’s just a big retracement, or an actual reversal? Or would you just ride the momentum of the recent down movement of the last 15-25 days since we are only looking to swing trade?
Thank you all, and hope to be contributing some trades I make soon.