Quote from saliva:
I'm more or less playing the S&R while monitoring the momentum to see whether S&R will be left intact or not.
I think it's worth noting that support/resistance shouldn't be seen in isolation. First, draw a trendline and see if the two converge. Second, price level alone doesn't mean anything. What's the big deal about ES trading near the previous support or resistance level? What should really matter in my opinion is how and how fast it got there. There is an important difference when ES is meandering near its previous support for the last 30 minutes and when ES is testing its previous resistance after shooting up more than 10 points within the last 10 minutes. All three components can be neatly summed in what I call "payment" or P.M.T (short for price, momentum, and time). Just my 2-cents.
One greatest misconception I see among traders is that they think there is only one support or resistance throughout the day. In reality, there are many minor support and resistance that corroborate with one another to establish a major support or resistance.
Hence, there is no such thing as a "major" support or resistance in my dictionary. However, as I stated in my previous post, you can guage the momentum on its way up or down to the support/resistance to get a feel for how these price levels will hold up. Let's take an example. Suppose we just hit the support at 1250 and reversed course. Now it's trading at 1252. The next obvious resistance lies at 1261, which aligns with previous support in the past. However, there is a cluster of minor resistance looming over 1253, 1255, and 1258. All of these resistance will act as a barrier, much like those nasty bumps on the road to curb speed. Likewise, the momentum will be hampered with every encounter at these levels. By the time you reach your destination at 1261, you're flat out exhausted. As such, you rarely ever get a clearance on your first visit.
Having said that, the text book definition of a major support is spelled out as any price level that withstood the onslaught in the past. I have no qualm against that assertion, but if you bang enough times anything is likely to come toppling down. So my theory is that even a major support or resistance will get taken out, for the most part, on the second attempt. The key is just how quickly that will happen. The longer it takes, the lower its probability of success. Therefore, the wide spread notion that the third attempt usually ends up as a disaster tends to be equally true.
Again, it's all about P.M.T (Price, Momentum, and Time). So, pay up!
