I would love to answer! This all comes back to behavior. If there truly is something to be said about how traders behave around a level, then in addition to seeing this in real time with the right tick moving up and down, it should be somehow recorded on a chart. If I am to trade with a set of rules, I gotta outline quite well what I'm looking for to see that makes me place a trade. If I only have a 1 minute chart to go on, it makes it very difficult to see what is actually happening at a level that I am already watching.
Yes these important levels should only be taken from a daily/hourly/5 min chart, but when we are there, its time to pay attention. I'm not saying that I am looking for a 5 sec chart to provide me with a resistance or support level or even trend lines, and hence why in my example I use that resistance line as something that would have already been on my chart, and given that price stalls at this level, it does show me that there is something to this resistance. (this was just an example though... I'm not even sure if that resistance line is legit from a higher time frame chart).
Its kind of like this. When you see a bomb blast go off, all you really see is a big fire ball, lots of smoke, and crap everywhere once the dust settles. A person close enough to this is surely dead... but what killed him? A high speed camera would see the initial ignition, would see the shock wave, would see the fire spread out, and would see the stuff starting to fly everywhere. From what I read, its actually the shock wave that does the most damage since the brain is compressed within the skull and bounces back and a brain simply cannot take this. So one might conclude that the fire killed the person, or some major cut to an artery from shrapnel, but if you were able to see a shock wave from this high speed footage, and see the person pass out from this even before any object hits him, then this gives you more information.
In terms of taking the opposite side of a trade, I actually think that this gives me a pretty good risk:reward. If I'm expecting price to reverse here, lets say at a previous day high, then if I take a short right at that level, I can either already be in a short when price fizzles, or if it breaks through, a tight stop will take me out. Hopefully the stop is wide enough that a couple of ticks of penetration doesn't take me out, but if price should happen to go above by at least 2 points, this is usually a good indication that there are enough buyers to take it even higher. Now the idea isn't blindly to short at an overnight level, but to see if I can spot hesitation in the 5 sec chart which makes me a place a trade close enough to this level so that a 2-3 point stop is all that is needed to tell me that this level is no longer providing resistance.
If I wait for price to BO above the level, I have always been caught in taking a long at the worst place. If I wait to see the reversal and see price actually going down, I get into the short much too late, and once again, I get in at the worst place, just before price goes back up to test resistance perhaps one more time. So in my example in the first post, I'm simply outlining where a good place to take both a long and short are.
So I'm just trying to look at this from the point of view of accepting that I don't know what will happen next, but if I get in at the very best place, my trade either works instantly, or fails instantly.
), it simply isn't that profound of a comment to make. Of course a nimble trader can take the reversal, expecting a bounce, and if it doesn't go, just get out quickly. But I hope that you can understand that in terms of pure logic, a prediction like this has very little weight because most bases are covered with your statement.
