Help with S & R lines

I need some help with the S&R lines.
I just started demo trading and created 2 orders, both orders went against me and the SL was hit. I just need to ask the experts whether the S&R lines that I drew are correct.

Trade 1 EURUSD
Sell @: 1.2400
SL : 1.2500
TP: 1.2200
See attached EUR_USD_Daily.jpg for my S&R lines

Trade 2 GBPUSD
Sell @: 1.5746
SL: 1.5846
TP: 1.5546
See attached GBP_USD_Daily.jpg for my S&R lines

Any help is greatly appreciated.

They look good to me. But always remember S/R levels are not exact levels price will bounce through them or never even touch them from time to time. It all depends on how many pending orders are around those levels and where they are. Hope this helps

Thanks for the reply. Could you reccomend any other indicator that I could use with SR lines?

The best thing at spotting S/R levels are the 2 holes in your head called your eyes. You can try drawing trend lines to. When the trend lines meet up with S/R lines you can generally expect price to react to these levels

As far as Indicators you should really learn to spot these areas yourself before relying on indicators. One you have that down you have

Moving averages tend to provide Dynamic S/R
Fibs and pivot points tend to act as S/R

Those are typically all I use so there may be more than that. Again try to spot areas of S/R by your self then when you areas line up with trendlines, fibs, pivots, moving averages, Whatever you have a higher probability of price reacting to these levels

A good indicator to use for drawing trendlines is fractals as it highlights swing highs and lows and those are the points you should be using to draw your trendlines.

I have also found the 50ema to be a very useful dynamic S/R but agree with the above poster, horizontal S/R lines tend to be your best bet IMO. Because they are so obvious many people use them, making it more likely that you will get a bounce or a breakout with momentum.

Yes you also have to get a feel for how price acts around these S/R lines. If you watch them you can see if it looks likes its going to be a reversal or not. This is using price action confirmation. But theres also a good rule 3 knocks and they open the door, take a look at my notes of your screenshot.

Red circles are the “knocks” or retests, the red arrow is the break out. You can see these S/R levels were tested sevearl times. the green ones are the tests on the S/R that held, Circles are full tests. I put green squares on questionable ones. But as you can see following those tests we see big bull candles, almost engulfing candles. If you can see that kind of Price action developing you can be more sure it will hold. The top example as with all things is trading isnt super clear. But these are the things I look for. I am very comfortable with horizontal S/R considering I have an entire system based purely on those. If you play them the right way and with the right set of confluences you dont need to add anything else to your charts.

there will be slight variations among traders but your lines are relatively spot on.

swing highs and lows can also be detected using the naked eye

Thanks for all the replies and the examples too. This is extremly helpful.
Much appreciated.

Awesome info! Thanks for taking the time for such an educational reply!

Others have answered you perfectly. However, just to add if you find that you get confused trying to find those S&R lines, then one way is to go to an even higher TF and see.

I have another question for the experts. I have attached the EURUSD chart, with the SR and trend lines that I noticed. If my lines are ok, it looks like the trend is confirmed (3 hits). What I want to know is how do I trade this?
Should I

  1. sell at the red line(resistence) or
  2. buy aroung 1.2387.
    I am leaning towards buy, but I would like to know what the experts are thinking and their reasons.
    Sorry for all these questions, I am just trying to get a better understanding.

The overall trend is still down and in resistance. So I would look to short. Once price breaks that high from JUN 20 then retests it as support then I would consider buying it.

Also remember on a down trend there is no real need to mark lower lows. If trading with the trend you should only be concerned with the lower highs.

Thanks a lot. Much appreciated.

  1. do you plan to sell once price gets back down to the red line?
    it may be good for a few pips, but there is higher chance that you will be selling into incoming buying before or near 1.2400.
  2. this one is a better choice. ideally you wait for confirmation of extra long bias (through price action on same/lower timeframe and/or indicator, whichever you favor)

SR-wise, 1.2387 is a better line than 1.2442. alternatively, you can view this area as an SR zone (1.2387 to 1.2442). the trend seem to be turning. next possible resistance is 1.2700 up to 1.2750

don’t be sorry when you ask. nothing to be sorry for when you are learning :slight_smile:

why not? for simplicity’s sake?
lower lows can break or hold, so I think it’s essential to take note of them.

What is your S/R formula?

I use this,

High + Low + Close divided by 3 = Pivot ( Yesterdays H-L-C 1H chart)


Pivot + Pivot - Low = R1
Pivot + Pivot - High = S1
Pivot - R1 + S1 = R2
Pivot - (R1-R2) =S2

So, for instance, my S/R for EU today

Pivot = 1.25820
R1 = 1.26096
R2 = 1.26545
S1 = 1.25371
S2 = 1.25095

[B]But theres also a good rule 3 knocks and they open the door,[/B] Mei said that,

and I agree, I want 3 bars to clear the line before changing trend direction…

Also, remember that once the line is broken and turned, THAT line become opposite, meaning once R1 is broken, that same line then become S1,

you are referring to pivot points, which can act as S/R.
price-based S/R has no ‘formula’.