Hi guys I was just looking at a graph and I saw some support and resistance zones but I don’t know if I placed them right. Also is there anyway I could help confirm them. Would I use something like stochastic and when it hits the resistance see if stochastic is in overbought area and vice versa for support also would using Moving averages help here is the graph.
Your blue lines look reasonably drawn. I can’t tell what your gold-colored line is denoting.
Your lines represent specific price levels, [B]not zones.[/B]
Why did you choose to draw lines at those specific price levels? Answer: Because price has been turned back (reversed) at those levels one or more times in the past. In other words, the market is saying that something was going on at that level which created an obstacle to price. Therefore, it is reasonable to suspect that price [B]may[/B] be turned back again, in the future, if it hits one of those levels.
That’s the basic concept of support and resistance levels.
Support and resistance can only be “confirmed” by future price action — not by any indicator. Support and resistance can be used — and [B]should[/B] be used — without regard for any trend-line, moving average, or other indicator.
Not all support and resistance levels are created equal. Some levels are stronger than others, meaning that they continue to present a barrier to price. Generally, the “strength” of a support or resistance level is indicated by the number of times price has failed to penetrate, and move beyond, that level. But, apparent strength is no guarantee that price will respect that level the next time.
Ok mate thanks for the response so should I just place my stop like 10pips above the line if I feel the price will bounce of it?
and the gold line was just there to show what had been a resistance in the past.