I look at areas of volume as well as specific pivots. An example would be AUD finally breaking below .7580 level. There was lots of trade .7580 to .90, then . 7610 to .25. Volume profile. I don't use it directly but just know where the market has spent most of its time. You can eyeball it from the charts as well.
Yea I can see the wicks, people buying at those support levels? So how did you trade them? Personally looking for a retest on 7580.
How I traded depended on the trend of the day or more specifically how the market opened and responded to price levels. You want to see the London open hold. If not then you've either got chop or a reversal possibility. Sometimes the chop resolves itself going in to NY open, or the market is just waiting for news. I use a 123 pattern for support or resistance, but as previously mentioned, context is everything. You would expect a break in an uptrend without any specific news to find support quickly, so it's scalp only, expecting retracement. You have to be careful not to go to the well too often. I try to let the market tell me, once it has broken, where it wants to settle. This takes time and patience. But I've gotten better at seeing the loss of momentum. In trading as in fencing there are the quick and the dead.
Well put and well illustrated, and you've shown why so many retail traders are always late, even if they are on the correct side of the trade.
Monday I would be weary of chasing the first trend, no matter how good the chart looks. So I would be looking for more weakness in the currencies against the dollar, but I think the market will take some prisoners first. I've seen trends evaporate on Mondays.
The setup is you have the currencies looking for buyers. And newbies trying to pick a bottom. So I would expect weak reversal patterns to fail in a market looking for support. Where is the support? Ill let the market tell me.
Obviously if we get strong buying right off the bat, I'm going to have to change my thinking. Then I'll be looking for support in a theoretical uptrend. Where? At previous high volume levels. A strong push up that fails miserably would be even better.
Support & Resistance? Why do some work and some not? Does it really matter if some S/R levels work or not, there's other ways to determine if the market will continue or turnaround. For many, S/R is just a vague point of reference.