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Old 07-31-2011, 12:53 PM
trader1 trader1 is offline
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Join Date: May 2010
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Default How do you select your support and resistance levels?

Ive been spending alot of time reading into support and resistance levels and plan to base my trading around entry/exit at these levels. Ive specifically been interested in WMDs Deadly Accuracy thread and Sam Seiden's videos on FX Street. Both concentrate on entering on pullbacks to s + r.

My issue at the moment is that I see alot of potential levels all over the chart. However, Im finding it difficult to pick out the approriate levels to mechanically enter trades at.

Id be interested to hear how people who take a similar approach select their levels on the chart.
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Old 08-01-2011, 02:36 PM
erol erol is offline
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Join Date: Jul 2008
Posts: 10

This is perhaps one of the most basic and most difficult areas of technical analysis. It takes practice and real chart time to fully understand it. That said, here are some rough guiding points:

1. First draw areas where price trends and areas where it consolidates. As soon as you classify the two, you will be able to draw the appropriate support and resistance.

2. Look for areas where it has flipped (prior support becomes new resistance).

3. Look for areas where it has stopped multiple times at relative extremes. The appropriate "look back" period is simply to where the consolidation began and where the trend ended.

4. Look for areas where other traders will look. Support and resistance for the most part is a self-fulfilling prophesy. Look where other traders focus and you'll experience the "aha" moment.

5. Practice. This point is more important than the rest. Open a chart, go back in time for a few years and then drag one candle at a time. Spend 10 hours solid doing this and at the end of it you will understand support and resistance.
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Old 04-07-2012, 12:38 AM
khorner khorner is offline
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Join Date: Jul 2008
Posts: 9

I totally agree that there are a lot of support and resistance level in a chart but the key lies in the major support and resistance and not simply any support and resistance levels.

For me, I uses 3 types of support and resistance

1. Identify swing highs and lows: there are numerous swing highs and lows in a chart but I am only interested in the major ones. The major swing highs are those that have 3 or more candlesticks on it's left and right side and the same applys to major swing lows. The major swing highs will then acts as level of resistance and the major swing lows will then act as level of support.

2. Fibonacci level: the fib usually acts as strong level of support and resistance especially the 0.382, 0.5 and the 0.618 levels. Your trading platform will definitely have the function to help you plot your fibonacci levels and you can then use them as major levels of support and resistance.

3. Pivot points: the pivot points are usually tools used by those big dogs traders and therefore it is usually very significant. Before I trade everyday, I will surely plot the pivot levels as they are good areas of entry and exit. Therefore are a lot of websites that provides free pivot point calculator that you can use. All you have to do is to enter the values and it wi automatically gives you the levels. Very useful level of support and resistance.

Hope that i am able to shed some light for you.
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