Hey! just got done with the support/resistance and trend topic in school of pipsology.
It was pretty straight and forward, but what i didnt understand is how can i assume if the market will go up or down? lets say i draw support and resistance and trend line, and wait for confirmation. I can see that its a downtrend, but how do i predict that if it will continue this way or change its direction? and for how long will it stay in a down trend? (example: https://www.tradingview.com/x/mrBef9Ks/ )
how do i know where to enter the market on either a down or uptrend?
also if i wait for a pullback, what does that tell me? i didnt understand the concept of pullback.
I was taught to draws “zones” not lines. You start with a weekly(or monthly for that matter) chart and find a “range” where price tends to turn the other way and draw a rectangle connecting the two(or three) high and low areas.
Then you drop to a daily and see if there are any other CLEARLY definable “levels”. You don’t want all kinds of boxes
all over your charts, though!
Then you drop down to your interday charts to see where price action is and use those previously drawn levels as support/resistence. You can consider short as it hits the bottom of an overhead level, with your stop clearly defined just a couple pips past the top of the zone/level. Likewise, you could go long as it goes down to a level, with your stop below that zone.
Of course, nothing is guaranteed. Try it and see if it makes sense. There are a LOT of times I’ll go back and look at a chart where I had left the zones and see that it actually worked.
I hope that’s clear. Much easier to explain visually then verbally…
Exactly. And S becomes R/R becomes S when violated.
Nothing precise but I would say they work more often then not? At least it gives me a visual trading range and
tends to keep me away from trades when it’s “in the middle” . I was responding to your original query, "how do you know…"
and thought it might give you a perspective, at least to try?
Wouldn’t hurt to throw them on your charts and just see how it works? There are times when it pops above/below and you say, “ok, it’s headed higher/lower”, to then abruptly reverse. But you can kinda keep tight stops with the range.
Of course, IF you follow Elliott Wave, this technique has little value, but, hey, what do i know?(that’s rhetorical; I know little!)
I am basically just going through “school” here and trying to find a good brokker, in that sense i cant try that or anything else yet but i have this thread on my accaount so i will deff come back and try this.
Not wishing to sound too clever but an advantage of deliberate trend-following as a trading style is that you ignore resistance in uptrends and support in downtrends. you only get out when the trend fails (not necessarily reverses) and price tells you this. So there is less subjectivity in your strategy, and I find this helps with results but also steady improvement of tactics.
wouldnt that mean that i only trade trends, either up or down?
what i had plan is to go through all strategies one by one and then pick the one i understand best with good results. that way i know more tactics and can be easy to change if one fails in future.