History during analysis

Hi everyone, finally decided to join the community after a few weeks of rummaging through the forum. I’ve only been at this for about a month and a half, (putting the “baby” in babypips), but have become obsessed with learning as much as I can about trading in the forex market, and think everything about this is fascinating. As a part of developing my strategy moving forward, I’d like to understand how/if history and previous price action influence trajectory, specifically levels of supply and demand. I understand the concepts and how they determine which direction price may move, but I’m confused as to how far back I should be looking when trying to break down a specific time frame. I’ve heard some traders suggest zones aren’t relevant after 2-3 touches since institutions are most likely filling remaining orders at those times leading to the impulse/breakaway, but does this zone maintain significance down the line(i.e. 1 hour, day, and/or week) later? From what I’ve seen there is usually some hesitation at these levels, but sometimes they reverse or continue without difficulty through these previous zones.

Tl;Dr If I am looking at a H4 or H1 chart, am I wasting my time looking at and labeling what happened a week or a few weeks ago?

On a related topic, any suggestions as to how to draw these zones appropriately? It seems like everyone (rightfully so) has their own ways on labeling these areas, but sometimes my positions may never reach a projected area, which leads me to believe I never drew it correctly in the first place.

Open to anything and everything you all have to offer me, this place has been a great resource and I hope to continue learning from you all. Thank you!

I believe so. That’s because there traders who swing long term so those SR levels remain relevant for a number of them.

Not necessarily. The most recent ones are obviously the most important but it helps to keep in mind prior SR zones. You’d want to give relevance to timeframes though. Say for e.g. you trade the H1 timeframe you’d probably want to note the SR levels dictated by the H4 time frames and use the latter TF to gauge the overall trend.

Not necessarily. At times it could be a retracement/pullback/profit taking (which in turn creates minor SR zones in lower TF). But it’d be difficult to discuss it unless you posted an example of when you thought it failed. Then folks can give their input.

I believe the general consensus can agree on where SR zones lie. The differences usually lay in how folks interpret them. For e.g. folks who follow VSA/Wyckoff methods interpret and may act SR zones differently from the more traditional method. A caveat is also the use of dynamic SR lines around moving averages (believe a dynamic SR around a 20-EMA is the most popular one in use). I don’t use VSA/Wyckoff/dynamic SR enough to weigh their pros and cons though.

Below is me drawing SR lines and channels on GBP/USD on H1/D1/MN timeframes (factor of 22x-24x). Two interesting bits:

  • How a more recently drawn H1 SR coincided with a D1 SR from March this year.
  • How a more recently drawn D1 SR coincided with a MN SR from September 2000 (atleast!)

Thanks for sharing!