Is it possible to get a clue in Price Action if horizontal S/R level will hold or pass through ?
Thanks
/godzilla
You can look for reversal patterns like engulfing bars, hammers etc. But in my view these are very unreliable, the smaller the timeframe the less reliable these patterns are.
For me it’s more important HOW price approaches suppport/resistance. Let’s say price blasts through resistance, then in most cases it will come back to this level, resistance becomes support. If this pullback is overlapping chop then it’s corrective and your new support level will more likely hold. Coils, triangles and especially FLAGS are corrective by nature. Elliot wave theory describes very specific the distinction between impuls and corrective movement, check it out and get a feel for it. Unfortunately I cannot post a chart because I have less then 5 posts.
what is overlapping chop ?
You can upload chart in a image uploading site and post the url here .
A clue? Yup (A definitive answer? No)- supply/demand analysis coupled with volume which validates/nullifies the price action.
100% agree. I wish we could add more likes.
If you are trading Meta Trader 4 or 5 here’s an indicator I use with support and resistance to get a quick picture of what happens when price reaches certain areas. I found this combination to be very useful when planning your trade. Works on all pairs and time frames. The indictor is called ZZ_Orlova and all you do is take a look at see how many times it bounces of support and resistance or goes through, more touches stronger the S&R areas
hi, gp00053, maybe I’m being a little retarded, but can you explain more how you use this indicator along with s/r levels to determine whether a level will hold or break? THX!
Shuo
There is nothing we as retail traders have access to which will help in determining “…whether a level will hold or break”. Absolutely nothing.
What we do have access to, are tools which will help in determining whether a level MAY hold or MAY break. Couple that with sound risk management, and you have a decent trading plan.
Example: If there is an exhaustive candle @ the peak of a bullish move near a supply zone, but the underlying volume is well below average, then, you as a trader can suppose that this is a trap for less-experienced traders who are greedy and fearful. Greedy because they’ve determined a bullish trend is in play and they want to reap profits and fearful because they wait until the very last minute to get into the trade (i.e. go long).
You make the assumption based on volume, price action, and other tech analysis that the supply zone will not be broken. From there, you ensure that the risk-to-reward (i.e. where your stop would be and where your target is) is favorable enough to risk capital. You stick to your guns, wait for your price, and let the market do the rest.
Price doesn’t stop on a dime and reverse. It takes time for a prevailing move to turn around. Professionals will test the market to see if the time is right to bring prices back down (i.e. in our example of a bullish wave, insiders will test the market to ensure there aren’t any buyers left). When the amateurs get in @ the top, and an insider test to the downside works (no demand @ high prices), price will be marked down trapping those weak positions. Professionals know that retailers will hold onto losing positions 2x longer than winning ones. Then, the process repeats itself.
Look up the wyckoff market cycle.
Not retarded if you haven’t used it before and have a question. I’ll speed this up and hopefully make it easier to understand by directing you to this video. I’m not vouching for anything they are selling or offering. The utube video is short and to the point. The only difference between the Zig Zag indicator that’s standard on your MT4 or MT5 platform, and ZZ of Orlova at the bottom of your page under code based is the ZZ of orlova doesn’t repaint. This video is a description of the that does.
I find ZZ of Orlova more accurate.
In my picture Green stars indicate Resistance, Magenta color is Support. If you drag and drop ZZ of Orlova indicator you see wing high (green) Swing low (magenta). I’m not using support lines, I use stars instead of lines, but it doesn’t matter. Look at how many times these points swing highs and swing lows touch your support and resistance lines.
The more they touch the stronger the area. When you’re first starting out at least I did, I found this to be a great indicator to help me understand support and resistance. This indicator does not predict any future, as I said the points High is where price found resistance. The swing low is where price found support. Check the video and if you have questions post them here; the more new and experienced traders share the better we get.