Hi,
I am new to forex and my first experience with real trading was making some wrong decisions and losing more than $2k.
I try to guess when will the price bounce and respect certain resistance levels but it seems that its not always bouncing. How do you guys identify it? on which time frames? and is it good strategy?
Itâs good to have S/R levels to watch, however thatâs not enough.
You should be looking for price to form reversals or break and retest.
Start with daily charts if youâre new to this and do not trade real money until you can show consistent profits in demo.
You canât tell until after the fact. But it has a better chance of holding if it has held a number of times in the past. Same with support.
Good advice. Reversal candlesticks formations or highs and lows normally forms at possible reversal levels. A high is a candle that has 2 or more lower candles to both the left and right, vice-versa for lows.
Looks like youâre using a counter-trend system. Iâve had more luck with trend-following systems. Such systems do not include âguessesâ and predictions about the future.
You imply that price ought to âbounceâ and ârespectâ certain levels. IMHO, this is the same as gambling. Better study the money-management side of things than trying to predict the future.
Wait and see what price does before you guess.
I scalp reversals but if you get in to soon you are guessing. Even if you wait you can still be wrong. sometimes price will blow right through a line you have determined like it wasnât even there, other times it will be a barrier.
The price does not care where you draw your lines. keep that in mind when you expect something to happen, you are better off reacting to what price does at a line then anticipating what you think it will do.
You cannot tell if price will break SR levels and if someone tells you can, hold onto your wallet and run like the wind 
This may not be good advice for the newbie but when you see price hit SR and it seems to be reversing, go down TFs and see what smaller TFs are doing and you can see the reverse most of the time. An art to do this but plenty of screentime can cure that.
the question you should ask is not: âwill the price respect the S&R levelâ
you should ask:âwhat will i do when the price reach the S&R levelâ
you can not predict the next price move unless you have a crystal ball⌠the only thing you can do is react to previous price move.
once you see the price do something that you are waiting for (like touch a S&R) you need to have a planned reaction for that move⌠that will be your system. then you need a reaction for what the price will do next⌠and that is close with losses, close with profits, reenter more moneyâŚ
unfortunally no one can tell you if the price will respect or break anything:mad:
Look for a market that moves similar to your target market, but will move ahead of it. That is what you need. It acts as signal to enter and exit. Overlay markets and observe until you see what you need, then you have it. There are many such conditions. Example: Any market and itâs future market, when they spread, take the trade moving back together. Be sure you know which way it will go though. You do that by observing the cycle it is currently in. If you look, you will see the beginning and ends of the trends and cycle. You can identify the tops and bottoms of the trends and cycles. Ever heard of the Guaranteed Profit Trade? Buy and sell the market, and itâs future, when they spread. They will move back together, you can pull profit in both directions.kgcken
I use S/R with candlestick analysis on 8hour and daily charts. There are good tutorials on this methods on forex4noobs.com.
Well itâs important to remind yourself what actually causes support and resistance levels. If we rally up on some random news release and happen to push to new highs, then price falls back down, that could very well have just been all of the buying interest fizzing out with no followthrough.
So now on your chart you see a resistance level, but it just happened to be an arbitrary point it time that describes some of the price action of the area. The only significance it has now is that it was a new high for the session (which might then be somehow used by people as a place to enter or exit or whatnot).
Otherwise, the real, true resistance and support come in the form of large orders at that area. So for a solid resistance level, itâs from a very large-sized offer (limit sell) at that spot. Sometimes from a big hedge fund, maybe a sovereign fund, or even real money (like pension funds, mutual funds).
When price gets to that order, it sets off the massive selling which knocks price back down. So the whole time that the order was resting there, it was ready to become resistance once price hit it. Which I think is the kind of thing youâre talking about here - wanting to know if price will actually hit a wall when it gets to that level.
Now unfortunately, we canât know about every single order and be 100% sure about them, but there are some services that try to report that sort of info when it comes out like Talking-Forex - First for FX News - First for FX News, RANsquawk - Real-time Analysis & News Ltd, and Order Flow Trading > News
Those types of services usually cover other stuff like news releases and things you might not care about, but they do also tend to report orders when they come up. Looking over from stuff from today, itâs been a light session but there was note of some offers from an asian central bank in EUR/USD near 1.3410 (reference) so if EUR/USD gets that high we can probably expect some good resistance up there because there will be a good amount of selling.
The other general approach is to just simply wait until price nears a support/resistance level and watch to see how price reacts. Many traders take a sort of âif -> thenâ approach depending on the reaction. So if the support/resistance is easily blown through, then we probably have good momentum and the s/r level wasnât very goodâŚso look for a breakout. If price hits that area and slows down, stalls out, and canât get any higher, then there is probably a good s/r level there and the momentum canât get through it.
Alas, you can still be faked out doing that, but nothing in this crazy game is 100% 
Personally I think you never really know, but forex is all about odds, statistics, and reward-to-risk ratio. That said, if the RR is nice, Iâd probably go short at a resistance level as long as it made some sense.
Guess is a dirty wordâŚFrom your post is seems that you donât have an analysis and filtration methodology yet. That is your first task. There are many, but you need to find one that will allow you to objectively measure and thus forecast the odds that a level will hold or not.
Real world exampleâŚI am watching the USD/JPY
My methodology is based in support and resistance, with a power measurement tool so that I am able to value OBJECTIVELY those S&R levels. I am expecting to see the Yen react to the support levels that I have drawn out in light blue, (1) but my power indicator (2) is showing me that there is still a lot of power to the downside.
This tells me that the odds are low for a reversal right now, and that price is likely to bounce slightly, then push lower as it seeks support strong enough to reverse it. I will not trade this long until power reduces and I get a qualified candlestick reversal pattern. (piercing pattern, hammer, bullish engulfing bar).
Those are the tools that allow me to turn âhmmm, that Yen looks ready to bounceâŚâ
into
âI should take it THERE with the comfort and knowledge that the odds are on my side because of all the research I have done into the kinds of situations and measurements that proved to work consistently in the past.â
Start simple with trend lines and chart support and resistance. Learn how support once broken becomes resistance, then branch out into price patterns and finally candlestick reversal patterns. Trade no more than a $500 account until you see profits three months in a row and you will be MILES ahead of the rest of the new traders out there!
So it has been a few hours, and you can see how the power has shifted.
And then it created a bullish engulfing bar to trigger entry
Others took the risk and the pain of fishing for a bottom⌠I used my instruments to tell me when that pain is likely to be over and the pleasure period of a new trend can begin. Expecting it to rally up to 97.40-50. We shall see what happens next
no one really know with certainty (otherwise, trading would be a walk in the park), but a good gauge of whether or not a level will get a reaction is how price reacted to it in the past. but like i said, itâs not sure, so its important to practice smart risk management.
I actually like trying to pick tops and bottoms⌠but thats why I keep getting burned 
right now I try to stick with just ranges, those seem to work the best for me. Then I aim for good reward-risk ratios.
as for USD/JPY, it dropped a bunch yesterday. Do you think weâll see a bounce soon?
Thereâs no surefire way to find out how. I just get clues on whether or not they would hold by looking at candlesticks.
There is a lot of opportunity there, but until you are consistently profitable, Iâd suggest focusing more on the âFast Secondâ strategies. Let everybody else take the higher risk, and get on board when the power has shifted more and the money flow is working your way.
My trade in the yen is done now⌠went from support to resistance (gold line = 50sma) So now my edge is gone and Iâd be guessing rather then trading with my edge from this point.
agree that there is no sure way to find out SR level. but it certainly helps with the use of technical analysis.
^this. When playing short-term stuff, especially, itâs in your best interest to move with the momentum rather than against it. If you think youâve hit a turning point, donât immediately fade it (easy to get burned that way :P). You want to see if that level actually holds pivotal before getting in.
I think itâs in our nature to want to be a little bit contrarian and catch tops and bottoms⌠it also makes us feel pretty awesome and the risk to reward seems pretty nice and drawdown is limited.
As nice as all of that sounds, itâs a dangerous game and most will blow themselves up trying to do it.