So I know that when price reverses from a downtrend to an uptrend (or vice versa) that the market remembers the previous zones of support and resistance and there is a higher probability that we will see a reaction when we come back to this zone.
But I was wondering if the key zone to look at when we went from a downtrend to an uptrend is the previous resistances (lower lows) or the supports (higher highs) of the downtrend.
I know it a bit confusing so I added a chart. Are the white zones (previous supports) or the yellow zones (previous resistances) more significant to price action now that we are in an uptrend?
Almost all my trades are trend-following. At least on the D1 forex chart I find that at s/r levels price in a trend most commonly either carries on right through or pauses for a few days (consolidation?) before continuing the trend.
After these outcomes its not unusual to see price pivot around the s/r zone (not specific price) and enter a pull-back: I use pull-backs as TP signals and re-entry opportunities because price normally resumes the trend right after. The least common outcome would be a reversal, but as the start of a reversal and the start of a pull-back print the same, Iām going to be out by the time the reversal is confirmed.
Once a support or resistance is created after retesting a previous one. Previous Support/ Resistance is now obsolete but nor respects the current one. One of my students learned this from me quickly. not knowing this will cost a enormous sum of money and mental energy
