I like looking at areas of trading that are important but are not always fully discussed in trading manuals and books etc. During the last month I have been looking at different charting packages as well as other pro charts besides Intellicharts and E-signals etc to see whether they can add to my trading strategy.
What amazed me was all the different support and resistance pivot points than can be used – and they can all differ. Most traders appreciate that this being a World wide 24 hr market, daily closes don’t happen all at the same times and all our charting package use different levels to estimate daily pivots.
I see when I visit chat rooms etc how many traders come up with difference prices which they look upon as a key level – and no one else sees on their own system
So we can use different S & R’s like Camarilla, Woodies, De mark, Fibonacci’s, Murray’s etc and all get different levels were we expect the price to rest - retrace down or break through and go higher.
I have attached a Usd / Cad 4 hr chart – showing during this last 3 days 18 various levels that are suppose to offer Support and Resistance –in less than a 100 pip range. Some might be in a cluster within 5 pips of each other whereas other can differ by 5-20 pips.
Normally you expect to see about 7 -10 S & R’s lines on a chart which might cover 200-400 pips range over several days.
We expect the yearly, monthly and weekly pivots to have additional strengths – than say a Fib just based on a 120 pip intraday rally. When they do meet at confluence points, as you can see on the Cad chart how important 1.0438 and also 1.0523 are as support and resistance points.
Ideally you enter Limit orders above and below these key areas – as one is expected to break and if they are important areas any break might be for more than a day or two.
If however you stay within a range – such as what’s happened on the Usd /Cad for the last three days – you either trade within the range (which I find very profitable) or you wait and trade elsewhere if it’s the wrong time of the week or month for the next larger movement.
Naked chartist tend to work between large S & R pivots- whereas Intraday “wave” artists ideally want them 20-50 pips apart so they can take multiple large lot trades with very high probability levels- whilst awaiting for the range to break out.
When you next expect a price to stop or change at a certain level – and its does not – this explanation might help to explain why. Have a good week