Sorry, I have confused things a bit, I have renamed the topic and rephrased the question slightly.
Let’s consider there is a W1 single swing low, and this swing low cannot be related to any other swing high with a line/zone i.e. it is a single swing low support.
Now, let’s consider the following two scenarios:
There is a bearish trend on D1 timeframe, there is a pullback and the price bounces of a W1 swing low (which has become resistance) from below. I go short, because I believe that in downtrend support becomes resistance and this is a good entry point. So no question here.
There is a bullish trend on D1 timeframe, I find a good entry point (whatever it is), then I am planning to take profit at the next W1 or M1 resistance level (which ever one comes first). So the question is, in an uptrend do I still consider a single swing LOW to be resistance for this purpose? In the first scenario I did, because we were in a downtrend. But now we are in an uptrend, so what do I do?
I wouldn’t say its a role reversal RULE, I’d say its a role reversal POSSIBILITY. However, its is just as easy for a low to become support, then resistance, as it is for a high to become resistance and then support. Weekly swing highs or lows are more powerful than daily or less.
But of course, sometimes established swing highs and lows and supports and resistances are completely ignored by price. Price does what the big players tell it to do, not what the charts say it will do.
Ah ha my friend. You have just discovered your true job as a trader. Pressing the buy/sell button is the easy bit. Doing the research, conducting experiments (backtesting) to support your hypothesis is where the real work starts. Best of luck to you and I hope you find the answer.
I understand nothing is for sure in the market and that the higher the timeframe the more important the level.
Just to clarify, let’s consider there is a W1 single swing low, and this swing low cannot be related to any other swing high with a line/zone i.e. it is a single swing low support.
Now, let’s consider the following two scenarios:
There is a bearish trend on D1 timeframe, there is a pullback and the price bounces of a W1 swing low (which has become resistance). I go short, because I believe that in downtrend support becomes resistance and this is a good entry point. So no question here.
There is a bullish trend on D1 timeframe, I find a good entry point (whatever it is), then I am planning to take profit at the next W1 or M1 resistance level (which ever one comes first). So the question is, in an uptrend do I still consider a single swing LOW to be resistance for this purpose? In the first scenario I did, because we were in a downtrend. But now we are in an uptrend, so what do I do?
Haha, I have discovered it quite a long time ago to be honest. Have been backtesting various things for quite a while, but nothing worked long term, and on top of that I regularly realise my market knowledge is too subjective and too limited. So at the moment I have decided to try to master trend following trading, therefore I am trying to get into much detail here. I very rarely post on forums, but now will be doing it a bit more.
Sorry, I have mixed up words “support” and “resistance” in my previous post accidently, I have edited it. I have gone short BELOW support that turned resistance.
That’s what I assumed for a long time and rejected it. But check out the charts, you will see that in uptrends price frequently bounces or previous recent or non-recent swing highs to continue higher (and vice versa).
To me, price breaking thru resistance in an uptrend and becoming support during a pullback, esp on the larger time frames would contribute to the validity of the s/r level.
Under these circumstances, if resistance is broken then acts as support during a subsequent pullback, I would want to see a continuation of the uptrend with a close above the close/high of the initial s/r penetration and above the open/high of the pullback. Next I would place an entry order by the close of the pullback and as near to the new support level as possible in anticipation of a retracement.
My SL would be at the low of the original pullback if the shadow is long and close enough to support or on the other side of support if the low is too far from support or there is no shadow or a short shadow.
Next time ill skip the long explanation and just post a chart instead lol