Trading support/resistance

[NoDoji]

Quote from superbull:

So you are talkng about having two positions, one short-term (for the bounce) and another long-term, opened when reversal pattern is formed, right?

I'm referring to intraday only, first bounce usually a smaller move, then most often a retest of the low and if it double bottoms or pivots off a higher low, it generally makes a much stronger move. Same thing with resistance, look for double top or lower high for the stronger move down.

I use previous day's high or low for opening S/R, and once first 20-30 minutes establishes the day's first high/low, I use that.

 

[cf0532]

Yes, to be bold is not sufficient on the market. I believe trading is about testing traders' courage. It is a career, such as doctor,engineer ,scientist and so on. You learn more, you win more.

Quote from superbull:

GCSICLRBC,
the first bounce can not be too big, so you earn not so much in this case, but you should, for covering loss trades.

Yes, fortune favors the bold, but I sure you know that to be bold is not sufficient on the market.

 

[NihabaAshi]

Quote from superbull:

Hi All,
let's share ideas on how to trade near support/resistance lines more efficiently.

I think first touch of support line is not very good change to buy. But what's the best time to enter? Second touch or some other reversal signals, which of them? Thanks.

Support/Resistance are not trade signals by themselves.

Simply, your entry signals are different and should only be valid for trading if your entry signal occurs at a s/r level.

For example, lets pretend you like Volume Divergence as an entry signal.

Note: I only mentioned volume divergence because I saw someone here at ET recently mention that's what they used in some moving average strategy.

Thus, you only take trades if volume divergence occurs at a s/r level.

My point is that you cannot trade s/r levels via subjective method unless you are a profitable veteran trader that has great intuition.

Until that point is reached in your trading...

Your entry signal needs to be well-defined (rule base) and it's only a trade if it occurs at an s/r level.

Once again, support/resistance levels by themselves are not entry nor exit signals.

They are like alerts to tell you to be ready to trade when/if your entry signal appears at that s/r level.

Last of all, there are dozens of different types of ways to determine s/r levels.

Simply, you can have a dozen traders with different s/r levels on their chart while viewing the exact same chart

There's an old thread here at ET that shows this fact when traders were asked to annotate a particular chart with their s/r levels.

Mark

 

[superbull]

Quote from NihabaAshi:

Support/Resistance are not trade signals by themselves.

Simply, your entry signals are different and should only be valid for trading if your entry signal occurs at a s/r level.

For example, lets pretend you like Volume Divergence as an entry signal.

Note: I only mentioned volume divergence because I saw someone here at ET recently mention that's what they used in some moving average strategy.

Thus, you only take trades if volume divergence occurs at a s/r level.

My point is that you cannot trade s/r levels via subjective method unless you are a profitable veteran trader that has great intuition.

Until that point is reached in your trading...

Your entry signal needs to be well-defined (rule base) and it's only a trade if it occurs at an s/r level.

Once again, support/resistance levels by themselves are not entry nor exit signals.

They are like alerts to tell you to be ready to trade when/if your entry signal appears at that s/r level.

Last of all, there are dozens of different types of ways to determine s/r levels.

Simply, you can have a dozen traders with different s/r levels on their chart while viewing the exact same chart

There's an old thread here at ET that shows this fact when traders were asked to annotate a particular chart with their s/r levels.

Mark

That's excellent point of view. You are telling that s/r can be better used as filters, not as signals.
That's fine, but ... here, in this thread, I try to consider s/r as signals, not filters.

The reason why I insist is that s/r can predict pivot points PRECISELY. (Look at the attach I posted in previous post). Given that, s/r are best stuff to open positions from and put SL behind opening price and level.

So risk is MIN, - it allows setup small SL, whereas potential profit is big, at least bigger than risk.

There are really many methods of drawing s/r. But I noticed, that drawing by candle's bodies works best.

 

[NihabaAshi]

Quote from superbull:

That's excellent point of view. You are telling that s/r can be better used as filters, not as signals.
That's fine, but ... here, in this thread, I try to consider s/r as signals, not filters...

Actually your initial post in this thread was the following...

Quote from superbull:

Hi All,
let's share ideas on how to trade near support/resistance lines more efficiently...

I shared my idea that you need an entry signal to occur at s/r level instead of using s/r level as the entry signal.

You now (after my comments) say that in this thread you want to discuss s/r levels as entry signals.

That's ok because in reality, we are still talking about the same thing via a review of your initial message post in this thread...

Quote from superbull:

...I think first touch of support line is not very good change to buy. But what's the best time to enter? Second touch or some other reversal signals, which of them? Thanks.

Look again, I see two question marks above and they both are in reference of entry signals.

S/R levels and entry signals are two different price actions that can be dependent or independent of each other depending upon your trade methodology

I'm suggesting that it doesn't matter what you call your entry signal nor does it matter what you call a s/r level...

One can be called the filter for the other but it doesn't change the fact.

You're still wondering about entry signals at s/r levels.

Quote from superbull:

..There are really many methods of drawing s/r. But I noticed, that drawing by candle's bodies works best.

Lets get back to your chart example...

http://www.elitetrader.com/vb/attachment.php?s=&postid=2418136

Your method (not defined in this thread) about candle bodies may work best for you but not work best for others.

This gets back to the point I made earlier...different traders have different s/r levels or zones that they believe works best for them.

Therefore, what's the point of your discussion...

To find out what others are using that works well for them or to tell others you only want to discuss what works best for you.

If the latter above...your going to need to be clear about how your interpreting s/r levels because your only chart example is vague in reference to candle bodies via a trend line drawn on the higher lows or a rising price action.

Mark

 

[speres]

Quote from crgarcia:

S/R doesn't work

why not?

 

[superbull]

Ok, I admit that in the 1-st post I considered more wide area of using s/r and now I confused you.
But anyway here I want you guys to discuss s/r as main approach in TA. By this I mean that we evaluate signals by s/r
and we can define some filters which in different cases can be optional or different.

Your method (not defined in this thread) about candle bodies may work best for you but not work best for others.

When I say it works, I don't say it works for me only. I mean this method is used by many traders enough to use it in TA and do profit trades.
I hope it clarifys the point of the discussion.

In the chart I attached you can see a support line (yes, trendline here) drawn by candle bodies and the next touch point could be used as an entry point.

 

[eagle]

Rated: *****

Quote from Rod Shaft:

if it's a major s/r point and you're taking a position in front of it, get the fuck out in a hurry if and when it breaks

 

[NihabaAshi]

Quote from superbull:

Ok, I admit that in the 1-st post I considered more wide area of using s/r and now I confused you.
But anyway here I want you guys to discuss s/r as main approach in TA. By this I mean that we evaluate signals by s/r
and we can define some filters which in different cases can be optional or different.


When I say it works, I don't say it works for me only. I mean this method is used by many traders enough to use it in TA and do profit trades.
I hope it clarifys the point of the discussion.

In the chart I attached you can see a support line (yes, trendline here) drawn by candle bodies and the next touch point could be used as an entry point.

Ok...thanks for the clarification.

Lets get back to your chart example.

You keep saying candle bodies and yet your chart example has part of the trend line (initiation) based upon the body area of the candles while the latter part (towards the end) of the trendline is not based upon the candle bodies...

The latter part of your trendline is in fact based upon the shadows and not the bodies.

That's why I made the reference of your s/r level being vague or without any details to explain the differences shown in your trendline drawing.

In addition, don't get trendline analysis and s/r analysis confused.

S/R Analysis is the study of change in supply/demand.

Trendline Analysis is the study of trend like price actions.

Sure, you can use trendlines to help visualize your s/r levels just as long as you understand that not all trendlines are a change in supply/demand.

Just the same, just because there's a change in supply/demand doesn't imply there's a trend.

My point via the above is that your chart represents trendline analysis and not s/r levels.

Also, without trying to complicate this more via trying to get you to be more clear...

Are you using Japanese Candlestick Analysis to help with your s/r level identification or using candlestick charts instead of bar charts to help with your s/r level identification.

Simply, just because someone uses a candlestick chart doesn't imply they are using Japanese Candlestick Analysis

(most traders that uses candlestick charts do not use Japanese Candlestick patterns)

I suspect your use of the words candle bodies while making no specific references to particular candlestick patterns implies your not using Japanese Candlestick Analysis and just have a preference of candlestick charts instead of bar charts.

As you can see, I'm trying to get you to be more clear and that may increase more converstation in this thread for you.

Therefore, can you post more charts because the one chart you posted is vague considering the differences between trendline analysis and s/r levels.

Mark

 

[superbull]

Quote from NihabaAshi:

Ok...thanks for the clarification.

Lets get back to your chart example.

You keep saying candle bodies and yet your chart example has part of the trend line (initiation) based upon the body area of the candles while the latter part (towards the end) of the trendline is not based upon the candle bodies...

The latter part of your trendline is in fact based upon the shadows and not the bodies.

That's why I made the reference of your s/r level being vague or without any details to explain the differences shown in your trendline drawing.

In addition, don't get trendline analysis and s/r analysis confused.

S/R Analysis is the study of change in supply/demand.

Trendline Analysis is the study of trend like price actions.

Sure, you can use trendlines to help visualize your s/r levels just as long as you understand that not all trendlines are a change in supply/demand.

Just the same, just because there's a change in supply/demand doesn't imply there's a trend.

My point via the above is that your chart represents trendline analysis and not s/r levels.

Also, without trying to complicate this more via trying to get you to be more clear...

Are you using Japanese Candlestick Analysis to help with your s/r level identification or using candlestick charts instead of bar charts to help with your s/r level identification.

Simply, just because someone uses a candlestick chart doesn't imply they are using Japanese Candlestick Analysis

(most traders that uses candlestick charts do not use Japanese Candlestick patterns)

I suspect your use of the words candle bodies while making no specific references to particular candlestick patterns implies your not using Japanese Candlestick Analysis and just have a preference of candlestick charts instead of bar charts.

As you can see, I'm trying to get you to be more clear and that may increase more converstation in this thread for you.

Therefore, can you post more charts because the one chart you posted is vague considering the differences between trendline analysis and s/r levels.

Mark

The latter part of the trendline is NOT based on the shadows. I built trendline by two points - bodies.
The 3-d touch is really by shadow but it doesn't define a trend, it's a trend touch, that we can consider as entry point.

You guess is correct, i'm not using Japanese Candlestick Analysis, candlesticks only help me to find s/r.

I use trendlines to identify price s/r, as you mentioned. Example, rising trend can be thought of as a rising support level.
Since we are interested in entry points, it's not so necessary to separate trendlines from s/r levels.
Your remark is correct. But let's not compete in terminology. It's not our goal.

I'll attach more charts here below.