I have a quick inquiry and i hope someone can assist me.
My inquiry is related to the S&R breakout. How i would know if the price is going to break the support line or the resistance line ? is there is anyway to foresee this coming ? and i would highly appreciate if you can share with me video link on youtube that discuss this issue.
There are many ways to [I]foresee[/I], but it doesn’t necessarily means it will break. You can keep an eye on trader sentiment, on COT reports (google these terms for better explanation), you can also view the higher timeframes and the patterns formed there to see if a breakout is possible. When the price eventually breaks it’s better to wait for confirmation, i.e. price close above/below the last support/resistance, and then set your buy/sell beyond these points, as many times you’ll see false breakouts. And if you’re eager to catch the breakout you’ll end up losing when the price returns where it was before.
Not to mention that more often than not the support/resistance turns into resistance/support after the breakout and the pair in question tends to return to test that resistance/support once again before moving once again into the direction of the breakout.
its very for a major support and resistance to give a break out which are certainly derived by the proper technical analysis you have done. they may give a false break over time but if they get to sustain below their major support or above their major resistance they can probably reverse the trend which are the outcomes of major events generally. until and unless there is a drastic shift in the sentiments, the major support and resistance do not give a proper break out
You can’t. And if someone says you otherwise they are guessing.
Also don’t try to trade beakouts when they do break. You’ll get eaten alive by high frequency stop chasing algorithms.
Plus when you are entering at breakout of lets say a resistance, your risk is under the support. So it let’s you only with a narrow RR. Not worth it.
There are a lot of wedges in the forex market that can look like false breakouts. A friendly advice. Don’t trade breakouts.
Those are not viable setups anymore, especially in FX.
It only works on low caps in stocks.
Looking for support and resistance is the most important part of technical analysis. To trade based on support and resistance you first need to know how to locate them. Like, if you are able to join multiple highs with each other that will be your resistance line. Same way, when you are able to connect to the lows it’s the support line. Most of the trades follow the closing prices if they have breached the support line or resistance line for breakout.
The support and resistance line can be checked trough gap down or gap up opening
Through trend lines
Round Numbers
Moving Averages