I am about to begin demo testing Phil838’s method of Support/Resistance Reversal trades and Scalp Line trades. According to Phil, a single line to represent support or resistance is too limiting and he instead recommends “support/resistance zones.” I made my first effort at creating zones for the GBP/USD. It’s recommended that I search back 4 to 5 months for zones, so I went back to October 30th, 2009 to find areas of support and resistance. Please comment and critique the six areas of support/resistance I have drawn out. NOTE: Charts attached on posts two and three.
I would see it as a resistance level becuase it was support that caused a major trendline break in Dec/Jan then gave a little more support at the end of Jan before it was finaly broken then it became a resistance level second week of Feb.
Another interesting thing to note is the december trendline I drew across the highs, which was subsequently broken, also picks out the low much later on at the end of Feb.
This is a phenomenon you will see alot if you pull trendlines I have not seen that talked about much but I first noticed this when I was trading a demo account and I use trendlines extensively now on my live account so I see this very often I dont believe it is coincidence, I see them as trendline and support and resistance line all in one line.
My own prefered method of drawing horizontal resistance lines is I want to see a good break of the trendline to confirm strong previous support at that level which, once broken should become strong resistance later, thats not to say I’m right I hope someone will correct me on this if I have drawn the wrong conclusions because I pretty much came up with that method on my own so I dont know if its accepted practice or not.
Edit: Sorry my bad, I didn’t realise you had two pics up and the 2nd one had that zone marked already
