Indicators are liars! Support and Resistance Trading for the S&P emini

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Quote from ESResistance:

I am having a think about that at the moment, I have 2 main set ups I use, I am going to take some time to document these for everyone in the future.

But for the moment lets focus on the CORE which is support and resistance.

I am hoping in future to extend my ideas and levels to other instruments so that the largest number of people can benefit.

EDIT: Regarding how I define my levels, if everyone just took a moment to google "support and resistance" all will be clear.

http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:support_and_resistance

Is an example.

I dont use any fancy mathematics, algorithms, astrology, tea leaves or palmistry. I very simply draw a straight line at bottoms/tops and wicks
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Thanks for starting this thread on S/R levels, and answering my prior question about how you manage your exits.

I look forward to your discussion of what entry methods you use (indicatorless, I would assume).

If you could post a sample chart of yours with your levels marked, it would be helpful in understanding how you derive them. It appears you are using price pivot highs/lows from your prescribed 1 hour and 4 hour charts.

By the way, nice trading today (even if only one entry). It's always nice to go into the weekend with a early green Friday. :)
 
The 41.25 area did take some heat kissing a high of 42.75. If entry was on the level I would have been stopped by a tick. That is why I emphasise the importance of a set up as confirmation of the level to increase the odds of the trade working and to get you a better entry. (For all the negative nancys I am done for the day and just providing some commentry on the levels.

The area did offer a great move.

The move down from the 41.25 area pushed us back to the 37.25 area where old resistance became support,

I will think about documenting my set ups for all those interested and post them soon.
 
Hi everyone

Hope you are all having a nice weekend.

I am a day trader, Timescales of 1day+ are not of a major concern to me as what is most important to my style of trading is what happens within that given day.

However I do like to keep an eye on what the market is up to in the bigger picture, I am sure their are many of you out there who can provide some great market commentry, please feel free to add your thoughts here.

Attached is a weekly chart from mid 2002 charting the bull market we have had for the last few years. I have marked up som Fibs, I only really pay attention to the 50% fib as it has the highest statistical significance. The 50% fib is currently at 1178 just below that level we have some MAJOR support and resistance between 1164 and 1171. This area has proven as Support and resistance over many years even going back to 2001 (not shown on the chart). I believe the confluence between the 50% fib and MAJOR S/R in this area could lead to a major bounce in the ES.

This is just my opinion, I am NOT an expert on the longer term view and so am hoping some of you other guys might have an opinion.

If possible I would like to do this every weekend - have a discussion on where WE think the market may be headed on the daily/ weekly timeframe for the week ahead and overall.

ES

http://es-supportandresistance.blogspot.com/
 

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Quote from ESResistance:


However I do like to keep an eye on what the market is up to in the bigger picture, I am sure their are many of you out there who can provide some great market commentry, please feel free to add your thoughts here.

ES

http://www.spamblog.com/
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ESResistance

First, I just wanted to commend you on an excellent post here. Although our trading styles differ, there are many times when our entry areas overlap, and it’s clear that everything you discuss from price structure analysis to trade management is very sound.

I am always looking at the bigger picture too as a way to put day trading setups into context.

I happen to use market profile concepts to define support, resistance, consolidation, etc, and again this is just another way to look at things that line up with many of the same levels you point out on the charts.

In a given timeframe the market moves in obvious directional paths and the pivots along the way provide valuable S/R areas as you point out

Then, consolidation areas (balance) also forms to provide valuable support/resistance, breakout information relative to other consolidation areas and pivot points, etc.

Thought Id throw in my big picture two cents (with a chart) as a follow up to your weekly charts, and while much of this is very obvious, I still think its always a good idea to have a handle of the bigger picture at all times.

As you point out we are in a big picture downtrend that clearly is bracketing between 1300-1200 that may or may not be longer-term support area for a major bounce higher.

From a pure market profile standpoint, a move higher will only develop from the result of either strong initiative or responsive buying.

The market tried all August to initiate buying above the 1300 bracket high but could not do so. The many attempts to break higher set up very strong and tight consolidations (and tough trading) areas in the middle of the bracket.

When these consolidation areas broke to the downside it signaled a clear path back to the bottom of the bracket, which has been an area of very strong responsive buying, so the reversal yesterday was no surprise.

The responsive buying yesterday is the first sign that maybe, perhaps this area that will hold in the long term view you point out and propel the market higher, but there are two very clear conditions in place to monitor.

First, all the congestion at the top of the range will provide clear resistance, so the 1260 area will have to be penetrated for price to move higher from here.
Second, if we test the lows again, and price acceptance takes place in this area, price may be heading a lot lower.

I know this all goes hand in hand as to what you have said - it nice to look at percent retrace, fib levels etc, as potential confluence and expectation points, but in the end, the unfolding of price action relative to support and resistance formation will determine the flow of price activity to follow.

Again, excellent post and great information.
 

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Hi EMC2

Thank you for the analysis. great stuff.

MP has always intrigued me, it is very powerful stuff. A good friend of mine has had great success with it.

Thanks for your input. :)
 
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