Here is a chart I just shared with some friends of mine ... I had two signals simultaneously: one to go long, one to go short. However, the long was right between two of the "pivots" I use that I mentioned to you yesterday. As those areas failed to hold as support, I gave them weight as resistance, and so rather than take the long, I took the short which was a 2 point scalp - successful.
OK; say you are trading/investing some cash ETFs, below 50dma + 200day moving average. So I would want to [1] use those as S&R/50, 200day moving averages [2] monthly close,12 months[3] weekly,closes52 weeks [4]and in my example, its going down like dead red duck, so ignore the highest moving average [5-7.777] Every ETF is different; I knew small caps + QQQ would have larger drawdowns , if long-that's why i may hold QQQ during summer but not this summer.So I watch S+R levels on SQQQ more...…………………………………………………………………………………………………………………………….
support and resistance are linked to volatility. The greater the volatility the less there is of support / resistance. When creating a algo linked to statistically observed spikes in volatility for a trading session.
%%Plenty of truth there; but a runaway uptrend is much more likely in a bull market. And with plenty of stuff below 50 dma,200 dma ; much more likely to have a runaway bear/panic selling;That could bear could change OCT 31 or NOV 1 ; lol, not a prediction.,
Thanks for the chart So assuming your black horizontal line is Resistance provided by the Low of the Day of 2 days ago. Will you consider a long above that level and a short below it?. If a Short is trade, would you take the short just with the LH+Resistance or will you wait for the outermost trendline to break.? Will your purple dotted horizontal line will signify support?
Correct ... anticipated or potential resistance. It is not resistance until the market tries to breakout above and fails on the attempt. These two really would have the same answer: That all depends upon one's trading plan, which defines the conditions under which one takes a position. In my case, there was a long set up according to my plan about 20 minutes prior to the high, and if I were to execute my plan perfectly I would have taken profits at +2 and +3 points with runners that, ideally, would be liquidated into the high break. I am not a breakout trader. I am primarily a retracement trader. As such, I'd wait for the break above R and then a pullback set up to go long. I was taking short trades by 11:51 as the set ups developed. So no, I would not have been waiting for the "outer trend line break." I do not use trend lines at all, though I do make use of channels to gauge OB/OS for certain set ups. In fact, under certain conditions, I'd have had a resting sell limit above the market at or around that level to go short. The conditions did not exist that would have prompted me to do so. So I waited for the breakout to fail, and then started shorting the retracements. This are my "pivot" levels. I will buy tests of those levels. That purple line was the RTH low, and all day long I expected that price would break it by a tick or so and provide at least a long scalp. I was done by the time it happened, so I did not take that trade. But I am not a breakout trader. Those levels have worked consistently for me to "interpret" price action on any given day for a years. But the again, there are two pieces of the plan for the trader who incorporates S/R considerations. The first is what levels the trader chooses to view as important to the trader. These levels help the trader as market observer. The second is how does the trader then define the conditions in which he or she engages actively as a market participant. I believe the levels I've given you will work for you if you start to track them, back test them, etc. I didn't come up with them myself - I learned to use them from some pretty heavy hitters. As to when and how to take action, that is where your set ups come in. It sounds like you have that part together. So go back over this week's trading one day at a time, note these levels on your chart, and see how they relate to your trades. Maybe you will see that these levels can be helpful, or maybe not ... but it sounds as though you are quite a long way toward putting this all together. Add to that the fact that you are more intelligent and a harder worked than the average ET'r and you should do quite well.
%% NOT a prediction, if that chart is anything related to QQQ, Nasdaq/derivative...…...; one days low is not really support @ all- nor does 5 minute chart really have any support in a bear trend. S+R is not exact anyway, even though sometimes it turns @ 200dma.Of course it has to take out the days low to go lower.LOL……………………………………………………………….
Thanks for your input. I am trying to understand the Horizontal S/R logic before starting to consider moving S/R levels. But thanks for taking the time to participate.