As far as the euro, is this what you are talking about? where it should bounce down off of the resistance?
OK, so basically the lesson i learned from you is--lets take the above euro example...in theory it should bounce off down from the resistance, but we can insure that our trade works well if we look into the other timeframes ALSO to see how the market is acting. otherwise we are only making a bet off of a simple single bounce from resistance. if the market remains sideways like in the euro screenshot (hourly) on both daily and 15minute then probability is higher that it will indeed fit our hypothesis that euro will bounce down off of resistance. UNTIL we see a trend change on one or more of the timeframes, we can expect to remain within that range. is that an appropriate moral to our exchange?
OK this is how I see it. Euro bounced up hard last week and surprised a lot of traders--caught them short. It shot up, then retraced to around 1.08. Then bounced to 1.0850_area. Came down now retesting 108.50. Usually it takes 3 or more pushes in the currencies to break through, so I expect another shallow pullback then a move higher. That's the setup and I'm looking for any deviation. Selling below 1.08 would cause me to question being long here. We haven't talked stops, but you would need either a small one or a really big one here. Later
OK thanks but I say should here cause of the context. The market is approaching a previous high. It should reject it,at first. Yes it's just a probability.
Yeah, to say that "it should" implies you have statistics to support that price reaction for that particular trading instrument. Something else...support/resistance levels are not trade signals. You need a trade signal to show up at those levels to tell you its a trade. Simply, just because price is at a resistance level doesn't imply it will retrace and the same is true for support level. Keep something else in mind...there are +100 different ways to identify s/r levels. You can test this out and start another thread and post a chart with no s/r info and then ask people to annotate the chart with their s/r levels. You'll find different s/r levels for the same price action chart. Some traders look for bounces off the s/r levels and others looks for continuation through the s/r levels. You can practice plotting s/r levels on charts and then put the chart away. Next day, review how the price action responded to those levels you've identified. You'll then begin to see that you need a little more info about the context of the day to go along with those s/r levels.
To say that it should is based on my experience, not any statistics. And nowhere is that implied. And it could be completely wrong. Also, we are watching market action. If you want to trade it go ahead.
There's no guarantees. Therefore, you're absolutely correct..."it could" be completely wrong...sometimes it will be wrong and sometimes it will be right. One thing you can control is the risk management and the type of trade signals you use when reaches s/r levels you're following. You also have control over the type of s/r method being used considering there's so many different types of s/r methods. That's where the stats can be helpful if you're consistent in using the same risk management, same trade signals and same type of s/r methods. Further, knowing the stats will also help with the position size management.
Thank you for joining in to our discussion. You speak of various methods of creating s/r levels. can you elaborate on this or recommend a thread that covers them? There could be some that are more effective than others, and I would like to learn these sooner than later haha. but basically what you are saying is to go back tomorrow and see how my s/r levels fared against the market. and do this for some time to practice and tailoring my s/r method. would getting more context of the day to go along with s/r levels as you say, for example, be TA?