Hello. I am wondering what is a good timeframe to determine support and resistance. I know it will depend on how long you want to hold your trades, but I don't really have a preference yet, as I am new and trying to develop a trading system. I have tried determining support and resistance on a 1 min chart and that is not working very well. Any suggestions? Thanks
Just re read the post I would look at the big picture first, then dive in to smaller time frames. So looking at daily charts for support/resistance then look at 30/60 min charts for s/r, then maybe a 5 min chart s/r for entry points.
It's absolutely critical that you decide upon what type of trader your going to be (scalp trading, day trading, position trading, swing trading or long term trading) because as soon as you determine your trading style or what your more comfortable with... That in itself will eliminate many timeframes to determine your s/r levels. Trying to do the opposite will only cause problems in developing your trading plan, overanalysis and possibly trade losses. Mark (a.k.a. NihabaAshi) Japanese Candlestick term
S/R have nothing to do with time. They have to do with tests. If a given price is tested repeatedly on the downside and holds, it becomes support. The opposite is true for resistance. The fact that price simply touches a point and recoils does not imply support or resistance at all. Therefore, look for those levels which are repeatedly tested and watch how price behaves on subsequent tests of those levels. Remember, however, that a test of hourly bars is considerably more significant than a test of 1m bars.
Regardlesss of your trading time frame, the S and R are the same. Re-adjust the answer given to you by Urkel who is correct about the methodology required. To understand the "envelope of trading" it is best to see at least three barriers that price must exceed to change the existing S and R. Commonly, you must go further than Ukrel suggests. By looking at the weekly you will see what you missed on the daily that was suggested. There are those that do edges. They speak of hitting homeruns occassionally. Any given edge makes different amounts of money when it is fully deployed (the early exit being avoided). You are seeking to know of S and R. The reasons you seek may still be unknown to you. This is commonplace. Making money is not done often at S and R. So S and R have lessor price signal value. But there is the occasional homerun. You will find out soon, I hope, when and why homeruns are hit. The longest ball that can be hit isn't going from one to another of S and R.
First of all, there are different types of s/r levels and some of them can change depending upon the type of s/r analysis your going to be doing. Lets assume your going to be using the traditional type of s/r analysis you see being discussed here at EliteTrader.com Daytrading via a 30-60min chart won't change your s/r levels although I myself consider this to be more position trading especially if you plan to hold positions overnight. I myself use candlestick s/r levels and they will change accordingly to the chart interval (accordingly to the type of trading I'm going to be doing). Mark
And the contradiction between these two paragraphs is? Despite that I would agree that you need to find a s/r timeframe relevant to your trading. 1m s/r will be relevant (maybe) for a 1-5m hold but unless the 1m s/r also shows up on 5m then you probably will be sadly disappointed in its efficacy for 60m holds
S&R is very much a side consideration, if even that. You have to get your great big muncher into some of all the points made available to you each day (eg YM).