Hi, quick beginner question… I like support and resistance levels because they seem to be quite accurate for me but it seems hard to know which level will work,where reversal will happen etc… are there any indicators to help with confirmation of those levels? any help appreciated!
All indicators draw their raw data from prices, and as you have correctly seen, price doesn’t tell you which S/R level will hold and which will fail. So I think your search will fail too.
Keep in view that if you e.g. exit a long position as price approaches resistance, you can always get back in if the level fails and price breaks through. But its much harder to be an optimist if you don’t get out and then the level does hold, sending price downwards.
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Since indicators are mostly based on preceding price movements they cannot determine a reversal until that reversal has happened. So eventually an indicator will reflect a reversal if it occurs - the question is whether it is quick enough to be of any use in this kind of application. Personally, I doubt there is a suitable indicator specifically for this purpose.
The broader question is do you even need an indicator for this! S/R lines are, in themselves, PA techniques and I think there are better ways to think about this. One such approach may be watching candle formations around the S/R line.
But I personally think the better way of treating this is to concentrate on your risk management approach. We all know that some trades gain and others lose and that is the point in these situations. You say that S/R is quite accurate for you, which means they are working more than they are losing. That is step 1. Step 2 is to set your levels so that your potential loss from an entry is less than your potential gains.
Risk and money management are far more important that just trying to “be right”. But you can maybe seek to improve your performance through selectivity of which S/R lines are most likely to “work”. For example, it might be wise to ignore a resistance level on a 1H chart if there is a strong uptrend on a daily chart. Or maybe concentrate on S/Rs developing on longer term charts even if Trading short term.
In my opinion, the tight, precise, definition of S/R levels in forex is primarily the end result of their use by the vast number of speculative retail trade and a large proportion of the professional market - therefore they are self-fulfilling TA mechanisms rather than reflecting true underlying fundamental market pressures. This does not lessen their relevance from a trading perspective, it only means one should treat them entirely from a TA perspective in terms on whether to act on them - and then from a risk/money management perspective how to act on them.
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In the beginning, you have to draw support and resistance levels on high time frames like Weekly, daily! Higher time frames S/R levels are more respectful by the markets!
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For drawing S/R level, you have to use Horizontal Line, Trendline, Channel ad Fibo! Besides, high time frames are relatively stable!
I like with this way seems quite simple, look on different timeframe will giving different information about support and resistance area, usually I am use daily timeframe to look on support resistance area because work as swing trader
You are on the right track; D1 is the best time frame for the swing traders according to my experience.