Support and Resistance - How do you determine it?

[AsstModerator]

Some of the questions sent in to FPA HQ are pretty good. A few days ago, one came in asking about how to determine support and resistance. Since there are many ways to do this, I thought it would make a good Question of the Month.


So, how do you determine support and resistance in your forex trading? Where do you draw the lines and what makes you put them there?

 

[kaligula]

One is as simple as opening 30M chart [or daily] and what jumps out as a support or resistance yelling "HEY I'M HERE!!!" I have no doubts, and these are my main S/R lines. They lways work whatever market conditions are

Then I watch closely, follow fractals, consider, whether this is already significant top or is it not, maybe switch to 15M to make sure, and until level of confusion reach 100% I have gazzillions of minor [=worthless] S/R marked. I never take any care about them, they always either work or not makuing me angry "I could've enter that one..."

In othet words - years of practice in ignoring something you think over for longer than 3 seconds.

 

[onshore]

For me I go first to the daily charts and draw lines at obvious Highs and Lows then scale down to 4H and 1H charts to compare the more times the pairs hits the line the more likely to be true.

keep it simple as i keep saying

oh:

But I have found in the world of Forex there are no rules

 

[roberto santori]

support and resistance

I like using 4 hour and daily charts to find support and resistance. the higher the time frame the better. What I do is find prominent swing high or lows, on either 4 hour and daily and draw a horizontal line. , also look for reversal candle patterns at those levels which gives me another clue. Prior support or resistance is also a good indicator
The more confluence of indicators the better.
The best trades are when a pair has already put in a daily range and it is at a S/R level. This happened last week on the eurousd at 1.2155 and look what happened .. Just shot back up to1.2470

Cheers,
Roberto Santori

 

[retireme]

Purely my opinion...

Support and Resistance are mythical!

I believe that even discussing them causes confusion for the trader.

There is price, there is movement, there is volume and of course there is past history. History is of no use, that is what happened before now (or price you see in front of you). You have carefully drawn your S/R lines on your chart, but hang on... the price isn't doing what it is supposed to! What does this mean? Were the S/R lines in the wrong place? NO! They were potential S/R lines to start with, not actual S/R lines. Price will do what it has always done, it will move, it doesn't care where you draw your lines. If it did, there would be no market and therefore no chance to trade. Ask yourself this question, why are there so many named patterns on a chart? Head & Shoulders, Double Top's, Double Bottoms, Triangles, Wedges... the list is endless? Your answer may be different than mine.

Trade what you see!
Rgds
Retireme

 

[RangerDave]

Lots of Sup/Res

There are lots of support and resistance areas and depends on direction of market and time frame. For me sup and resistance can be fibs, Ma's and moving average confulence (cross), BB, past price and Psychological round numbers 130.00. All can be traded in the correct circumstance, but none are always valid

Best wishes to all

Ranger Dave

 

[Steen Nielsen]

Zoom out

The way that I find Support and resistance is generally to use the bar chart, for a simple view of the market movements. Then I zoom out 2-3 times from what I normally look at of bars on any current time frame, which I prefer to trade on depending on my strategy. With this way I am getting a great overview of what price is doing, both in the structure it moves within as well as the more important suppurt and resistance areas.

After this identification, then you can zoom in on the chart again to see what price is doing exactly at the current moment...

 

[jnwfx]

S?R Channel

I like to start with a daily chart and try to establish a S/R channel by drawing lines from lowest valleys and duplicating the line to the peak for up trend and using the highest peak to peak of the chart duplicating to the lowest valley for the down trend. The lines arecoloured by time period and then move to the three hr chart and draw from the latest peak to touch or nearly touch the S/R line etc.

 

[diacon]

Hi,

I think a lot of interesting solutions is possible to find here:
www.nobrainertrades.com

There is in very simple way explained how to use support and resistance and how they can create patterns.

hope it will be useful
diacon

 

[jcris522]

Start big and narrow down

Support and resistance is one of the most important things in my trading technique, so I have had a lot of practice and here is how I determine the best levels.

First, it is always important to start on the bigger timeframe charts and note where strong support and resistance levels are because if you do not know these levels and solely focus on the smaller timeframes, you can have identified an excellent level only to see the pair do a major reversal because it hit a major s/r on a larger timeframe before it reaches your identified level.

The first thing I do in identifying strong levels is to look for peaks, basically places where one candle closed and the and the next candle opened and went right back in the other direction, to me that says strong level. If there are none of those peaks, then I will look for recent clusters of candles. Areas where 4 or 5 or more candles didn't make any major movement up or down. Then within those clusters I determine the best level by identifying areas where one candle closed and the next candle opened and went back in the other direction.

For newbies this can prove to be most difficult and the best way to get good at it is to practice. Backtesting is an excellent way to practice as you can go through years of data identifying levels over and over again and see what formations typically proves stronger than others as well as how levels on the larger timeframe charts can affect levels on the lower timeframe charts.

Eric Alyea is currently practicing the above right now and you can read his reviews here:

https://www.forexpeacearmy.com/forex-forum/intensive-reviews/8442-duellatorus-review-eric-alyea.html