Hello, I wonder how many pips are these support and resistance areas? Because it is said, in theory, that it is necessary to visualize the supports and resistance as a zone and not as an exact price.
I appreciate your answers in advance.
You can’t really put a number on these zones because there are too many variables, such as the timeframe are you looking at, or whether you use the candle wicks or not.
Typically, the higher the timeframe, the larger the zone.
1 Like
That is a really good question. First, I do use the wicks to establish the S/R zones, and in some circumstances these can be precise. In a lot of cases they are not precise and I find it necessary to draw a rectangle and the depth of that rectangle will vary on a case by case basis. What matters is how deep that triangle is compared with the overall risk in terms of units of currency (eg USD) that you are willing to risk for that trade. Let’s say that the rectangle is 20 PIPS wide and the acceptable risk represents 100 PIPS, in the case of a long trade, your stop loss will be 100 Pips below the bottom of the rectangle, but 120 Pips from the top of the rectangle, so your reward/risk ratio would be negatively impacted by the proportion 100/120 or one sixth. Once you have psychologically adjusted to this, you could forget the rectangle, and make sure you draw the S/L 100 Pips below the lowest wick around the S/R zone. It amounts to the same as drawing the rectangle on the S/R zone, but makes the chart look less busy. I hope this helps. Just don’t forget that the wider the S/R zone the less likely it is to be a true S/R zone. And with regard to setting any stop loss below the body of a candle, the price doesn’t stop at the body, it stops at the end of the wick, so if that wick crosses the SL, you are out of the trade at maximum SL loss. 
2 Likes
It’s not easy to put a number on these zones. There are a lot of variables that you will have to take care of with time frames being one of them.
1 Like