I am trying to trade the ES with support and resistance in conjunction with time of day.
I am using floor pivots calculated with yesterdays high, low and close. I also use daily price lines that include the open as well as yesterday's high, low and close. In addition, I have the Trade Prospector (
http://www.trade-prospector.com) calculated SR numbers.
Today, the ES rose to touch yesterday's close (891.25) near 10:00 EST. It then sold off to below the S1 (880.92). It stopped and reversed almost exactly at the TP BP2/First Lower Stop (878.6-878.7) near 11:00 EST.
It went back through the S1 and chopped its way to just above yesterday's close between 15:30-16:00 EST.
An astute trader could have taken two trades for approximately 10 points each.
Not being an astute trader, I stood aside and watched the market chop all day and took no trades.
My question is - what criteria do you use to decide that SR has held or broken? Do you just put a limit order at the SR expecting a reverse and then place a stop on the other side? Bottomline, when do you pull the trigger?
What's a reasonable stop to use for this type of trading with the ES? Many traders seem to use 1.5-2 points, but that looks way too tight for this type of trading.
I will say one benefit of this method appears to be that you won't be getting constantly suckered by all the gyrations between the SR points.
