I can see on the 5th of the January the price made a pull back and broke through the 1.0520 zone which acted as support in the past and showed a bit of resistance on this pull back up.
After after resistance at 1.0520 was broken on the 5th, the price rose until it eventually retraced and the 1.0520 zone acted as support.
My question is can anyone identify a pattern or “law” (such as Elliot wave, Goodman wave, Head and shoulders pattern etc.) which indicated the price would bounce off the 1.0520 zone where the blue line is on the chart, rather than break through this level?
Maybe the answer is just that after an initial breakout, the price is more likely to bounce on the first retest of the level but I would love to see the view of someone more experienced. The reason I am asking is I seen a video on Instagram by the user “roy_nl_” who says the price “must” bounce as he describes it as a basic rule of trading, he also said most people shorted the pair as they were expecting a breakout, I cant really understand why anyone would expect this level not to hold either.
Its not always easy to trade what you see actually happening, but the approach you’re describing suggests you’re chasing a strategy that will let you trade what you hope will happen. This is the difference between trading and gambling.
Nobody knows if resistance /support will hold or fail. Some say if the line has been touched x times in the past it is more likely to hold but statistically valid evidence for that would be useful if you can find it.
Much less risky to wait until price reaches a point at which it itself confirms r/s has held/broken. You don’t have to be ahead of the market.
Sorry I might have come across in the wrong way but what has me confused is along the same lines as what you said there. I agree with what you said, as I watched the chart I wasn’t sure if the level would hold as support or not but based on his video he seemed so confident it would hold I felt like I was missing something obvious. Maybe it is just from years of experience he was very confident it would hold.
IMO forex is not a perfect market where laws should always work. Market speculations can not have solid explanations as well as embraced under one universal theory. You can use trading approaches based on everything the key rule is to control your losses and cut them where the opportunity to earn is balanced to readiness to lose (and it subjective as well!). Study probability theory instead of some vague stuff, learn how to reduce dispersion of your trading, distribution etc. etc.
good luck.
Yep I agree 100%. Based on what he was saying it seemed like I was missing something which indicated there was a very high probability of the price bouncing but it does not seem like I am missing much after all…
Bear in mind (as Tommor wisely mentions above) that (a) these lines are always approximate anyway, and (b) that they’re never completely reliable: sometimes [U]previous[/U]/recent S/R translates into [U]future[/U] S/R - at other times, it doesn’t.
