Here’s a key lesson. Know your levels. They will tell you where to look for box patterns, where resistance can be expected, where your trade can work. When it is time to exit a trade. So what are these levels. Support and resistance levels and rounded numbers.
[I][B]Support and Resistance[/B][/I]
Like any other time frame swing highs and lows will form our support and resistance levels. And just like every other time frame, support levels will become resistance levels and resistance levels will become support levels. But we are not interested in yesterdays levels, last week or two years ago. Only the here and now. Look at today’s swing highs and swing lows. Map them out. It demonstrate where the current players have doubts about the price. And these levels will hold true for the day. Also don’t consider them as support and resistance. Think of them as proven areas of indecision. Price levels where the bulls and the bears can’t make up there mind who is in controls. When the price finally breaks in one direct or the other it is free to move as others see this movement and join in.
How you go about identifying these level on your chart will be up to you. I simple zoom out and draw rectangles to show them. Here’s my current chart
And of course if we zoom in we now see this
[/B][/I]Our rounded numbers are 000, 200, 250, 400, 500, 600, 750, and 800. Why the main players respect these numbers I don’t know but they do. So we can use that to our advantage. When swing highs and lows match a rounded number it makes that level of even more significant.
[I][B]Using levels to confirm a trade[/B][/I]
The best way for me is just to demonstrate in a trade I took while writing this post.
So may bias is still bearish even though the market is correcting. All day the price has basically been bouncing around between 1.29250 and 1.29500.
So I’m looking for a short box pattern breakout at these two levels. And I got one.
Right on the 1.29500 level a box pattern formed and the rest is history.
Enjoy the pips