[forrestang]

1st Update:

I wonder if momentum to the upside is falling off due to the LH we put in?

I still just don't expect a rally on this Friday.





2nd Update:
Note the comments on the hinge there. BTW, sucks we can't edit posts after 60 mins.


Final:
Out!!

[forrestang]

So looking back on the prior week, looking at some situations here.....

This 1st post will be about S/R, the next will focus on the entries relevant to trading those levels.

ANY and ALL comments are appreciated, or if anyone has examples of something they saw related to observing support and resistance, please post! You'll notice the great many questions marks behind what seem to be statements as this is still coming together and your input is greatly appreciated.

So let's look first at the relevant S/R leading up to Friday's session. Traditionally, I have looked at S/R as areas where price was tested in either direction several times.....But more so focus on areas where price was rejected, i.e. Major Swing Points. I attribute this to it being very visual. Like when you see price hit an area, then reverse for 30 points, to me it just stands out.

But I am reading (mainly in DB's work), that rejection isn't what's most important, it is areas in which the most trades take place, like when S/R is tested many times. This makes sense as, these are likely areas where speculators are most interested? Areas of defense maybe if you will?

The chart below is mainly me looking at what I deem major 'SWING POINTS.'




Now, there willl obviously be overlap of levels from both 'Major Swing Points' AND 'Areas where levels where molested several times if you will', So here is the same chart, but focusing on areas only where price was tested several times:




OK, so what are the differences between the two? Here is a side by side comparison of what's going on:




So how does this relate to Friday? Well this might be purely a handpicked situation, and purely academic, and it is of course an observation made in hindsight, but i think this may have shaped the entry a bit differently.

Notice the level I had from the 'swing' chart was 1520. I still think this was an important level, as even AFTER the trading session started, price seemed to know this level was there.

So 1520 was the level that I anticipated would be the best shot at a good long. And it still wasn't a bad trade, although the entry was a bit late, and could have been managed better..... But the area it seems we really wanted to be focusing on was 1509.50. And once price breached this area, and then pulled back, it was straight up from there:




Again, this is in hindsight, but it was something I've been thinking about all weekend and i hope what I'm trying to convey is clear?

I will make another post simply dealing with the crappy, late entry on Friday, and why even that entry should have been sooner based on S/R.

ANY AND ALL comments are welcome in obtaining a better understanding!

[atto]

Excellent work forrestang. You've nailed this concept. As you noticed, don't discount swing points, as they serve as possible areas of S/R. However, you want to keep your eyes on spots that have been traded many times. Why? More people interested.

As you see, after you learn how to identify support and resistance as you did, trading them becomes much easier.

[thalestrader]

Originally Posted by atto »

Excellent work forrestang. You've nailed this concept. As you noticed, don't discount swing points, as they serve as possible areas of S/R. However, you want to keep your eyes on spots that have been traded many times. Why? More people interested.

As you see, after you learn how to identify support and resistance as you did, trading them becomes much easier.

I'd second that, excellent work indeed.

And not only does trading S/R become much easier once you learn to identify it, but trading in general becomes more enjoyable and relaxed. What a difference it makes when you know in advance at which levels you will trade, and what price has to do once it reaches those levels to induce you to trade.
It sure beats hanging on the close of each bar waiting to guess in which direction the next 1-4 ticks will be found.

You have done a wonderful job this week, Forrest, and I hope you continue to share your work with us.

Best Wishes,

Thales

[forrestang]

Thanks for the insight into the S/R levels fellas.

As of right now, NQ price is hovering right at 1534. So the level you see on my chart is tentative as this may change.

It looks like the 1520 level is more important than ever. Leading up to Friday's session, it was only a swing point, but by the end of the cash session, it seems to have shown it's relevance.

This 1520 was tested on Thursday. During Friday, it was tested twice before being broken, then 'flipped' and becoming support.

We've made a push up to 1536 during the overnight as of right now. The only thing above it is a potential level at 1550. 1536 might become a good potential target for a long trade if price sets up that way.

PLAN FOR TOMMORROW:

The 1520 Level is key. If price drops to 1520, and price action dictates, a potential long from 1520 with targets to 1536 and 1550 might be in order.

The area between 1510 - 1520 is somewhat noisy. Seems as if a lot of activity is represented in this area? So I am thinking 1520 is a strong area of support. If price decides to spend time in this area, I probably won't touch it? Is this read of this zone reasonable, or am I missing something?

If price goes below the 1510 area, and price action dictates, a short from that area towards 1500 AND 1492 seems reasonable (1500 is there it's just not on my charts).

The above comments ARE NOT predictions, only observations of what my thinking will be should price reach certain areas and HOW it reacts in those areas.

[Dinerotrader]

Looking to sell at breakout below support zone.



Update 1: Support barely broken. I noted my entry, stop, and profit targets.



Update 2: My Support level appears to have been a little too high as support is being found just below my choosen breakout level. Moved my stop down since my entry appears flawed..... As I was writing this I got stopped out.

[Dinerotrader]

EUR/JPY. Entered long now at 134.06. Annotating real time is not my forte yet.

[thalestrader]

Originally Posted by imorgan »

Looking to sell at breakout below support zone ...
Update 1: Support barely broken. I noted my entry, stop, and profit targets ... My Support level appears to have been a little too high as support is being found just below my choosen breakout level. Moved my stop down since my entry appears flawed..... As I was writing this I got stopped out.

Hi imorgan,

I have a couple of questions:

1) Where was your initial stop loss?

2) What makes you think your support level "appears to have been too high"? Are you meaning that the spread took you in before a break of support? Or do you mean that you don't feel that you correctly identified a support level?

Thank you for sharing your work with us!

Best Wishes,

Thales