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Chapter 8, Part I. Support and Resistance. - Q&A

Discussion in 'Complete Trading Education- Forex Military School' started by john Garbett, May 21, 2011.

  1. john Garbett

    john Garbett Recruit

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    Hi
    Which is the best chart timeframe to determine true levels of support and resistance? If I use a longer timeframe - daily or weekly charts - I can easily determine the areas, and there are fewer of them. When I look at 1 hour charts or 15 minute charts, then I can see even more areas of support and resistance.

    I can only place 20-25 pip stop losses, ( I do not have the money built up yet in the account to place 100 pip stops) and typically trade from 1 hour and 15 minute charts. So often I am looking at upto 5 areas of support and 5 areas of resistance on the chart - within truer levels of support and resistance idenitified from a weekly chart.

    If you have the time to think about this I would be very grateful. Thanks.
     
  2. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi John,
    In fact there is no such term as "best time frame" for sup/res estimation. But our rule, that the higher time frame is, the stronger the levels - push us to general understanding how It works:
    1. First, you shoud identify sup/res on big charts - monthly and weekly.
    2.Then do it on daily
    3. And then, on your trading time frame.
    Why we have to do that? Because, for instance, montly sup/res stay around 80 pips from current level. Although you do not trade monthly, but when market will reach it - you will not understand where this sup/res come from, while you do not pay attention to higher time frames.

    So, in the beginning of trading session, you have to check where big sup/res stand and will you meet them today or not. If not - shift to your time frame levels. If yes - be prepared...

    You do right, that use as support and resistance higher time frames.
     
  3. mjunkyard

    mjunkyard Private, 1st Class

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    sup/resistance

    Hi Dear Sive;
    I really appreciate all your education and assistance!
    (I don't miss a video of yours for months already!)
    First a small clarification. At the end of this chapter #3 and #4 seems contradictory. Since #3 says that the longer in holds the better and #4 says the more it's tested the weaker. So I figured that the longer the support holds, you mean without being tested. Is that so? Doesn't it contradict to the double bottom idea?
    Now I have a question;
    In chart #3 (which by the way i remember from your trade entry video) I see certain things that I would like to understand why you as a proffesional trader see it differently.
    1) In terms of entry setups; how did you know not to enter at the inside bar and the doji before? how did you know to wait for the w&r? In lots of cases with the strong supports that you teach us the w&r doesn't occur and other reversal setups do appear.
    2) The support area was tested numerous times. What gave you the confidence that we're shooting upwards from here? Doesn't it condradict with #4 at the end of this chapter?
    Sorry for the long questions but you are the first one that explains forex to me in a way that it actually makes sense!
    thanks a million
    mjunkyard
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Mjunkyard,
    Looks like you've told about 2 and 3... There is no contradiction here:
    1. Second rule tells that level becomes weaker with each touch.
    2. Third rule tells that not the level will be stronger, but move after breakout, if level holds for a long time.
    So, while in first case we speak about the move after breakout, but in the second about strength of the level itself.
    Please clarify how you see this contradiction, looks like I do not quite understand.

    Here we do not analize, say, where better to enter or how we could enter in different points. You're right that probably we could enter in that point, that you've spoken. But this chart has a bit another application - just to show how wash & Rinse looks, and what to do, if you'll see it.
    Here I do not mean that I enter precisely here with W&R. This is just initial chapter about the lines - you need to wait a bit, when chapters about trading the lines and making overall trading plan will be released ;)
    Well, if we rely purely on W&R pattern - that's become clear, because this is Bullish pattern and tells that we should move higher.
    What contradiction do you see with this:Stop Licking is a fast pattern, so if market has broken support/resistance level (i.e. closed below/above it) and holds there for 3 periods (i.e. 3 bars/candles) or more, then probably this level has been erased by market action and not valid any more.?

    In general this is initial chapter that has no target to discuss the trading of the lines but to show different scenarios. There will be another chapter that will be dedicated particularly to trading.
     
  5. mjunkyard

    mjunkyard Private, 1st Class

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    Thanks Sive, once you clarified the first point all the questions got answered!
    Thanks again. Your education is invaluable.
     
  6. john Garbett

    john Garbett Recruit

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    Confluence Support and Agreement

    Hi Sive
    In your weekly analysis and daily videos of the EUR/USD pair you use the terms confluence support and agreement very regularly.
    How can I work these areas out for myself, and if I were to do so, how do I know if I have got it right? It seems to me that finding the area where there is confluence support and agreement is absolutely essential to establish on the weekly and daily timeframes.

    Once again many thanks for all of your help.

    John
     
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi John.
    This topic will be disclose with details in Fibonacci chapter. Read it, and if you will still have any questions - we will discuss them.
     
  8. Arik

    Arik Recruit

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    Hello Sive
    question? about a time interval in question, thank you in advance
    .
    Forth rule - Stop Licking is a fast pattern, so if market has broken support / resistance level (ie closed below / above it) and holds there for three periods (ie 3 bars / candles) or more, then probably this level has been erased by market action and not valid any more.
     
  9. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Arik
    Here we speak about any interval, since we've said "period". It means that if you trade on 5-min chart, then your 3 period is 15 min, while if you trade on weekly chart, then your period is 3 weeks.
     
  10. BenOm

    BenOm Private, 1st Class

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    Elephants or Whales

    Hi Sive,
    Thank you very much for the invaluable education.
    The subject of W/R and Whales is very interesting.
    Just out of curiousity,
    Do you know how many of these Whales exist? (all approx.)
    Do they compete againt each other or collude?
    When they open a position(s), what is the approx. lot size?
    The lot size must be huge to be able to move the market.
    I am just curious and I understand that you may not have the answer.

    Best Regards,
    Bernard
     

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