I don't draw SR line at all. I had this forex trading coach (unsuccessful trader actually). He drew thousands of SR thick red color lines on his GBPUSD chart. He started drawing it 20 years ago. That's why there were thousands of lines. You can hardly see the candlesticks because of thousands of thick red color lines. No one knows where he is right now. What trading coach ! his chart is similar to the one I've shown.
This seems to make a lot of sense... That sounds like the plot of a perfectly good horror story. "He drew thousands of thick red lines... and now, no one knows where he is. But there have been many reports of missing cows in the area, and we have all grown suspicious of strangers and fearful of the night."
A couple of thoughts... Our time is not infinite: WAY agree, so -- pre-selection-wise -- keep in mind that what I just posted is *modestly* successful {positive expectancy}, and really gives NOTHING away with regard to any Special Sauce -- but serves as a main plate for all those ads-ons -- to be undertaken as time allows and interests warrant. They're also there to *encourage* just those sorts of "What-If" questions from those who may have thought that their T/A came fixed in static form on their platform... (whether retail or Python/R/Metatrader etc...) Some method of pre-selection: eyeballs, net liq., etc.... Nothing too fancy. Show me a positive expectancy -- OR EVEN, show me a pattern so rotten that I might trade the other side, and so gain that positive expectancy anyway. Heh! Anyway, just planting a seed, for others to mind, water, weed......
Ah. There's a distinction between "here are some ideas that I'm willing to toss in the air" and "here is a hint about things I've actually tested and found to have positive expectancy"; it wasn't obvious which one you were doing. In the larger context of me being rather cynical (but not 100% dogmatic) about TA, I'm not likely to do anything with this in the near future - but given that I've come to appreciate and respect your (usually well-balanced) take on trading, I'll make a note of it. Perhaps, to misquote "The Ballad of Eskimo Nell", "when this man gets old and the market grows cold"...
Hahahahahahaha absolutely loved this. Sadly enough tough, this is some pretty accurate characterization of the mystical traders out there. I don't know where these people get the idea that, for whatever reason, the markets move based on magic numbers or lunar cycles but well, it's their money to spend. I assume you work with longer(ish) holding periods? I don't think I've ever even read into options trading, nor stocks in general. Since I mostly to day trading, I tend to stick to a single market (USDBRL futures) and a bit of spot forex. I find it easier to track the institutional money flows within them (I do a lot of macro analysis as well), since major players are constantly balancing their positions in reaction to fundamental news, etc. I find it extremely odd that people in TA often disregard volume, when Charles Dow himself was adamant about the role it played in confirming a potential move. Somehow, people insist on analyzing markets as if price was some sort of metaphysical force rather than the material result of supply and demand -- which are obviously related to volume. Maybe that'll explain the abundance of failure in this field. Graphical interpretation without volume, to me, is just as good as watching a football game based on statistical data/cold numbers rather than, well, the players and the game itself. With regard to volume as a tool for distribution analysis, I think you should definitely look into that. In particular, the relationship between volume and volatility (standard deviation boundaries) is something I find very powerful (it's actually what I use to trade, but on a graphical/interpretative approach). If you're interested, we can discuss these things inbox, I'd be glad to be of any help and since you're into quant, I can share the mechanical system I developed/backtested (manually). No need for the thousand dollars, of course. Hahahaha. The basic idea when it comes to volume, for me, is this: if volume confirms price, whoever controls volume (supply/demand) controls price. That's why I try to keep track of where volume is taking price (e.g.: lower, albeit on low volume, to what was previously an accumulation area which may now act as a re-accumulation area for big players). I definitely agree it has an element of art, since you're basically dealing with humans doing business with one another. However, the art is not in reading price action but rather in reading the market. Anyone can see if price is going up or down, but if you want to make money you gotta focus on what does this imply: are big players making a move? Is there significant volume involved? Who's negotiating here? Could we be clearing lower supply levels? If so, will there be demand in higher levels? And so on...
Interesting question, but after a bit of thought, "well of *course* there is! They're mirrors of each other -- opposites! What causes a breach (or a sustainment) of support will be the opposite of what causes a breach (or sustainment) of resistance. Optimism/pessimism; good news, bad news; "Over-valued!"/"UNDER-valued!" I mean, right??
Thanks, Captain Obvious! I mean from a behavioural standpoint in terms of PA. Does R give a greater rejection than S? Does it take more times on average to breach one or the other? Does a breach give statistically similar results, or does a downward breach (I suspect) move faster, but not necessarily further than an upward breach? I find it unlikely that PA approaching each is identically mirrored.
I think it depends on the market. From a basic observation I would think if you look at equity indexes historically overall from a macro point of view they’ve gone up. From that simplistic point of view I would think support levels would succeed more than resistance. But if you look at a range bound asset they would “match strength” hence price not being able to break the range.
(Summoning Horschack from Welcome Back, Kotter here...) Ooohhh! Oooh oooh! I know! Just buy ES or YM or NQ at the cash close, and sell at the cash open next day! Free $$$ zero risk forever! Rickshaw taught us all that. And he taught us so well, that everyone has been doing it, which is why it no longer works! That is why he rarely posts here anymore, because he is RICH from risk free zero $$$$. I'd like my $1000 in nickels please. (I have an industrial metal fetish. Sorry about that.)