I am interested in how people our plotting there support and resistance lines � I was plotting the support and resistance lines on a candlestick graph where the wicks touched my support or resistance lines at least twice
Then upon research on the subject I came across a few people plotting these S&R lines on a line graph, which shows just the close of each bar, again where the close hit the lines at least twice
I have attached a couple of pictures as a visual aid. Is there a right or wrong answer for this, to me they just look like differing techniques on plotting these lines.
Then there are others who plot the support & resistance as more zonal rather than actual body/wick level activity.
You’ll find that price rarely honors an exact level or line.
If, from a technical and/or fundamental perspective the general area/zone represents serious enough participation, for whatever reason, & has stood up to previous inspection, then in all likliehood it could well offer further merit on re-visits.
You might find that you’ll obtain increased value & risk odds if you observe the [U]general area [/U]as a potential ‘hot zone’ when plotting & analyzing your contact points.
Thanks for your input, I have not heard of S&R zones before but after doing abit of research these seem of increased value like you previously stated in your thread.
When I was researching the subject there was not a huge amount of information available regarding S&R zones, mainly lines.
I have attached a graph of a few S&R zones, in which one zone eventually gets penetrated. I think I am on the right track although your input would be greatly appreciated.
Yes, that’s more along the lines of what I’m referring to.
There are a stack of examples & commentary/explanations in the 2 threads I started, so you can leisurely stroll thru there at your convenience if you’d like to peruse further.
Obviously, you’ll observe, plot & manage this type of analysis according to your own preferred tastes, but it doesn’t do any harm to expose oneself to as many different views as one can.
Personally I find the zones to be of a higher quality aid than a specific line or narrow pip marker. Sure, plotting a line as a marker or radar signal on the chart is fine, but it’s simply there to focus me in on the general area of potential conflict.
If the area is of relatively strong significance like a key big figure (00) or an obvious horizontal barrier, then stops will generally be tiered or stacked either side of the zone, which is why you often witness sharp & volatile oscillations on & around these barriers. It’s simply the orders getting absorbed & the dominant bias playing out.
I’m sure you’ll find this particular technical exploration both interesting & informative. Take note of the common candle prints playing out on & around these popular area’s. You’ll begin to see how influencial the repetative candle prints such as inside & outside bars, hammers, doji’s/spinning tops etc can be as they reflect the ongoing psychology of the players at work up & doen the price ladder.
Thanks again for another helpful response. I have been playing with these Support and Resistance zones and there is usually a lot of activity within these zones. Although I am finding it difficult to gauge whether price is going to break these zones or bounce - How do most people gauge what is going to happen around these areas?
I have been experimenting with candlestick formations and volume analysis around these areas, but I am still finding it abit difficult. I have attached a picture regarding this.
As you can see the first area of support was broken, and in hindsight you could have said there is a nice candlestick formation - a large bearish candle followed by a smaller bullish candle (less than 25% of the previous bar) usually indicating a downward movement.
But more often than not I do not understand how to make an educated prediction whether price might break or bounce and a fine example of this would be the breakthrough of the resistance - I can see no correlation with Volume or Candlesticks? Any assistance would be very much appreciated.
I use s/r lines in my trading style. What you should look for is the overall trend, then if there is a confluence on a trendline, s/r lines, or fib levels. Once there is a confluence of those, I wait for a candle formation to jump in. You should only trade with the trend if you are first starting out.
Candle formation helps determine all my entries. (morning stars, evening stars, inside/outside bars, etc)
I have been analysising my trading goals - I think trading the 4 hour TF and the daily TF suits me alot better. Although the down draw is alot more it allows me abit more freedom away from the computer screen.
In the last couple of weeks I have been really trying to grasp FX and I have learnt a great deal regarding identifying trends using SHI channels and coupling these with S&R lines resulting in a few profitable trades on a demo account. Although as can be expected at the moment quite a few losses but a very large improvement then previously.
I am now going to start trying to identify candlestick patterns to identify potential price change - also I am looking at Bollinger bands, RSI and Stocks and there meaning/use to try and weed out the losses! I often find though my trades seem to float on average around - 10 pips at first, perhaps I am entering abit too early?
