Practical use of Support and Resistance

Let's establish what support and resistance are:

support is when enough buyers see the price as low so, they buy
resistance is when enough people perceive the price as high, so they sell.

<img src=http://elitetrader.com/vb/attachment.php?s=&postid=2218033>

 

So, correct me if i'm wrong, we just had some support in the ES 830 area and the next resistance is 860 area

 

so since we missed the 830ish long entry, next play would be to short at 860 area. Feel free to chime in everyone .
IMO stop should be always wide when trading S and R.
but how wide?

 

Most started watching the march contract yesterday.

You'll get different opinions on the subject.

To me, where the market bounced/stopped (in this case) going down or started consolidating is where there WAS sufficient demand to at least temporarily stop prices from declining.

When coming from a lower high, as in this case, I like to see price action that indicates there is still pent up demand. A successful test of the level, preferably a higher low. Or a modest quick minor lower low (head fake/2B) then rapid acceleration up.

I'm not sure just blindly buying a previous low in a downtrend will work out often enough to make up for the losses incurred when it just keeps going down to find a lower level of "support"/demand. Which could also be a temporary relative lack of new sellers as much as new buyers.

 

yes, good post. but imo a failure of support and resistance is also a way to use S and R.

 

Once it's actually failed, I agree.

 

from my 'limited' experience, i find that the moves after the breaking of support and resistance are bigger

 

that chart i just looked at had 2 bear flags...that says get SHORT!!!!

 

Here is a different view of your data and a continuation through current.

 

thanks, proflogic,

what indicator is that at the bottom?