Quote from rainman2:
Hi NihabaAshi,
I have a question about key candlestick s/r zones.
I can understand why the hammer on January 3rd and June 8th are key s/r zones but not the June 5th and June 14th candles.
Let's say future price action closes above the high of the June 5th dark WRB, wouldn't price still run into major resistance at the high of the June 2nd dark hammer line? What's more important, the s/r zone of the WRB of 6/5 or the swing high of 6/2 in determining confirmed reversal? Or would a close above the high of the 6/6 dark hammer give a more risky but tighter stop entry?
Also, being that the 6/14 candle is neither a WRB or a long shadow family member, should it be a key s/r zone or is it just confirming support of the 1/3 bullish hammer? Or is it a key s/r zone because its a swing low?
By the way, I'm using the IWM daily chart for these questions?
As always, thanks in advance,
rainman2
Hin rainman2,
WRBs are key candlestick s/r zones.
The June 5th WRB, price hasn't tested the entire body of the WRB.
Therefore, its still a key zone to monitor for any kind of pattern signal if/when prices retraces back upwards to it.
As for swing points...I really don't look at them to determine which is important via comparison to WRB's.
It's just isn't important info.
However, I only put value in swing points if they are involved in any pattern signals or WRBs.
No pattern signal or a WRB...I tend to ignore a swing point if price retest that swing point.
Also, my comments about June 14th was via the 120min YM chart that has nothing to do with the daily chart of IWM.
http://www.elitetrader.com/vb/attachment.php?s=&postid=1109463
Once again, any price action that represents changes in supply/demand is a key s/r zone.
More often than not...such is represented via WRBs, Hammer patterns and any other pattern that involves WRBs or Hammer Lines.
With that said...I can now answer a question that you should be concerned about...
Let's say future price action closes above the high of the June 5th dark WRB, wouldn't price still run into major resistance at the high of the June 2nd dark hammer line?
Your question is phrased in a way that your
assuming when prices reach a swing point or s/r zone that price
will do something to catch your attention.
I believe your question is that way because you use s/r levels or zones for entry signals.
I on the other hand use them for profit targets only.
What I'm saying (once explained in the thread before)...
WRBs that form
after entry in a trade are excellent profit targets and so are WRBs that formed
before your entry.
The same is true for any Hammer pattern that formed
before entry (I've posted two chart examples of such in this thread)...they too make excellent profit targets because they represent a
prior level where there was a key change in supply/demand.
For example, lets pretend your a swing trader and you went Long today for whatever reasons.
Price moves upwards without producing any White WRBs to tell you its time to exit and then one day it reaches that prior Dark WRB of June 5th.
That's an excellent profit target and if the swing point of June 2nd was a pattern signal for you...that too can be used as a profit target.
There's nothing wrong with using s/r info for entry signals...I just have more success using them for other things and not for entry signals.
In fact, if I do get a pattern signal that just happens to occur within the price range of a s/r zone...depending upon the price action...
I tend to
decrease my position size (more often than not) because things tend to get juicy with an increase in volatility...
Decreasing my size gives me a little more control on my risk exposure.
Mark
(a.k.a.
NihabaAshi) Japanese Candlestick term
