Most Useful S/R Lines for Intraday Trading Levels??

[lbhere]

I have found that I am putting way too many horizontal Support and Resistance lines on my day trading chart. I am guessing I am going back too far.

Which horizontal S/R are the most helpful for intraday trading?? Which are the ones I should be charting, and which ones are the ones that are not very important??

Thanks in advance.

-Lindsay

 

[expiated]

In reading your post, I was surprised to realize I don't even bother to put support and resistance lines on my charts anymore (unless I categorize adaptive price range envelopes as such) or at least I don't do so ahead of time. What happens is if I suspect an asset is initiating a reversal at a given level, I will at that point check to see whether support or resistance was established there at some moment in the past to determine if there is additional reason to think a legitimate reversal might be in progress. This makes sense for me because I trade based on what price is doing in the present—not what I think it might do in the future—so if it blows through a particular support/resistance level or fails to even reach one, those levels are, in effect, of no importance to me, so why waste my time trying to figure out where they are in advance?

 

[jeffbader]

I rarely have more than three levels within the daily ATR. You're looking for levels of significance. Sometimes only one important level is all you need to have in the day's trading range. Here's an example below of PG, from October 22, 2019. The price of $121.66 was very close to the following historic events, and so earned a spot as a horizontal line on my chart prior to market open on October 22, 2019:

• Previous all-time high that was set on July 30, 2019 ($121.76) with a long top wick on the daily candle, followed by four red days, indicating significant resistance at that price. This alone makes this price very important.
• That region ($121.40 through $121.80) also served as both support and resistance between August 28, 2019 and September 20, 2019
• The weekly opening price on Monday, October 14, 2019 was $121.62

I had the level $121.66 drawn prior to market open on October 22, 2019. Lo and Behold it bounced right off of it (well, within 6 cents).

Again, you want to identify levels that are significant and meaningful. If you only draw levels that represent areas or prices with historical significance, then you really shouldn't have an intraday chart that is cluttered with horizontal lines. When I end up with too many lines, I'll try to delete the ones that seem less significant to end up with only two or three per average daily trading range.

 

[qlai]

Which horizontal S/R are the most helpful for intraday trading?? Which are the ones I should be charting, and which ones are the ones that are not very important??

That's dependant on the type of trading you do, even within intra-day trading. Basically, imho, you need to identify where you will be in sync with the rest of participants trading on your timeframe(s).
I display:
Previous day's high, low, close.
Today's open, high, low
If stock is active pre-market, pre-market high/low.

Anything prior to that of interest, I set up alerts.

 

[dozu888]

How many thousands if not millions of traders have already looked at this stuff and have found nothing but dirt with no gold dust.

Support. Resistance. Good lord if traders start without learning this bs they prolly end up far better.

 

[Bum]

How many thousands if not millions of traders have already looked at this stuff and have found nothing but dirt with no gold dust.

Support. Resistance. Good lord if traders start without learning this bs they prolly end up far better.

 

[jeffbader]

How many thousands if not millions of traders have already looked at this stuff and have found nothing but dirt with no gold dust.

Support. Resistance. Good lord if traders start without learning this bs they prolly end up far better.

I really don't understand your take on this. Do you not believe that supply and demand is a real factor in price discovery? What do you believe is the mechanism that causes the instrument's price to change? Have you never watched the DOM real-time?

Humans are the ones directly buying/selling and they are the ones programming the bots. When used correctly, support and resistance are objectively verifiable as a useful leading indicator (along with the DOM). Obviously they aren't magic and price may plow right through them, but that doesn't mean that a significant level is "bs." So I agree that S/R all by itself is simply not enough - not even close. But if the level happens to be one of four or five different signals that are all saying the same thing, then the odds are just that much more in your favor.

Personally, I have found support and resistance (supply and demand) to be far more useful than any moving-average-based indicator. Of course you can point out that I'm not profitable, invalidating everything I've said. And that would be fair.

But just in conceptual terms, it is so much easier for me to prove that they provide some usefulness than it would be for you to prove that they can never offer anyone any usefulness. So your comment here just seems... like... I don't know, like you're really just trying to say that we shouldn't even be wasting our time daytrading. Which, you know, -sigh- I don't know. I guess we need guys like you trying to inject some sanity into our lives.

 

[jeffbader]

Plus, Dozu, how many millions have found nothing? I really don't understand where you're coming from. We all know that there are successful day traders out there. I'm half amused by your consistency in bashing day trading because I do genuinely find the banter entertaining, 49% sincerely curious if you truly believe what you're saying, and 1% thinking that maybe you're just trolling for your own entertainment.

 

[dozu888]

I really don't understand your take on this. Do you not believe that supply and demand is a real factor in price discovery? What do you believe is the mechanism that causes the instrument's price to change? Have you never watched the DOM real-time?

Humans are the ones directly buying/selling and they are the ones programming the bots. When used correctly, support and resistance are objectively verifiable as a useful leading indicator (along with the DOM). Obviously they aren't magic and price may plow right through them, but that doesn't mean that a significant level is "bs." So I agree that S/R all by itself is simply not enough - not even close. But if the level happens to be one of four or five different signals that are all saying the same thing, then the odds are just that much more in your favor.

Personally, I have found support and resistance (supply and demand) to be far more useful than any moving-average-based indicator. Of course you can point out that I'm not profitable, invalidating everything I've said. And that would be fair.

But just in conceptual terms, it is so much easier for me to prove that they provide some usefulness than it would be for you to prove that they can never offer anyone any usefulness. So your comment here just seems... like... I don't know, like you're really just trying to say that we shouldn't even be wasting our time daytrading. Which, you know, -sigh- I don't know. I guess we need guys like you trying to inject some sanity into our lives.

supply and demand - yes. but supply and demand is not real if they are self fulfilling prophecies... enough people looking at yesterday's low/high... sure they might look like supply/demand, but that is like house of cards.

the true supply/ demand comes from main street.... the moms and pops... how many of them look at these so-called 'key levels' bs.

event trading has far more merit - made some posts on amzn lately, that's a perfect example... bad earning came out... my pro boys knock it down hard to scare moms/pops out of their shares, not knowing it's a 'sell the rumor buy the news'.. and you can day trade this.

that's what I meant - traders could be far better off if from the very beginning they were taught to look at the right things, the true source of supply/demand and take advantage.

 

[jeffbader]

supply and demand - yes. but supply and demand is not real if they are self fulfilling prophecies... enough people looking at yesterday's low/high... sure they might look like supply/demand, but that is like house of cards.

If the prophecy is self-fulfilled... then isn't it real? I think I agree with your observation though, that it is like a house of cards. But if it increases probability, then I don't really care that the mass psychology of a round number (or even dollar amount) is not a true reflection of a company's fundamentals. What matters to me is where the price is going over the course of the next hour or so, not week or decade.

The true supply/ demand comes from main street.... the moms and pops... how many of them look at these so-called 'key levels' bs.

I agree with you here. And I don't have a good answer other than my pieced-together observations as I watch the DOM and pay attention to historically significant price corrections. I could totally be wrong. But I can't think of a better explanation for the high volume that comes in at the same price it did a month ago.

event trading has far more merit - made some posts on amzn lately, that's a perfect example... bad earning came out... my pro boys knock it down hard to scare moms/pops out of their shares, not knowing it's a 'sell the rumor buy the news'.. and you can day trade this.

Yes, I totally agree. I'm learning more and more how important it is to understand the game, and the daily/weekly charts are also a part of that. I'd like to think that I'm starting to see that you have an excellent point here.

that's what I meant - traders could be far better off if from the very beginning they were taught to look at the right things, the true source of supply/demand and take advantage.

Excellent point and thank you for clarifying.