Quite often I find that price very easily goes through support or resistance. In a lot of trading literature I have come across materials that suggest one should wait for S/R to be confirmed. This poses two questions for me. Quite how does one do that and also by the time that the S/R has been confirmed, price has moved quite a bit. Is that not tool late? Any ideas would be very much appreciated.
I'm going to repeat a prior message to you in another thread about a similar topic... Support/Resistance levels or zones are not trade signals. Instead, they are independent of your trade signals. Simply, if your trade signals appear at a s/r level or zone...take the trade. However, if your trade signals do not appear at a s/r level or zone...ignore the trade. Thus, s/r is being used in some way as a confirmation signal for your trade signals. To answer your question, waiting for s/r to be confirmed implies there a few possible answers. #1 - Literature you've read implies to wait for a s/r level or zone to be retested by the price action to confirm it's a s/r level or zone. #2 - Literature you've read implies to use support/resistance as reaction or swing areas and that the confirmation via your trade signal will occur at or near the s/r. With that said, I don't know your definition of price has moved away quite a bit. Therefore, it may not be too late for one trader while too late for you or vice versa on a different trading day. Mark
Another important factor is time frame. The shorter the time frame, the more pin pointed support and resistance become. For instance intraday, support may be where there is an actual real buyer at a certain price that you're dealing with. So, once he's gone, support is gone. On a longer time frame, support becomes more of a general area where interest has been shown before. For instance, if you're using monthly chart, you certainly can't expect stop orders at a support level from 2 years ago. Also, like to previous comment before, all indicators need to be tied into the equation to give you as much evidence as you can that the support is going to hold.
Focus on trend persistence and continuation instead of support and resistance. Support and resistance levels are meant to be tested and broken in order for trends to continue.