How good is static Support/Resistance?

#1
Similar to trendlines, Support and Resistance is a widely used kind of analysing the chart in the western world. The S/R can be either a High or a Low in the history, but not all are relevant. The market stops at these levels and either bounces back or breaks through. After a break through a Support can become a Resistance and res versa. These levels have to be seen more as zones than as line. These levels can be used in every time frame and can be important for very long time.

Money makers test where buyers and where sellers come into the market and try to shake them off. Typically the wick looks out of the zone and the body closes again in the zone. The longer the wick, the stronger the sign that the market will stay in the zone and likely will be on the way to the other end of the zone.

 
Sometimes it needs some more time before the market turns or rally on. So beware of it and don't let put you into a weak position. Bigger events of shaking off bulls and bears are the Bulls trap or the Bears trap. A Bulls trap is a long fake move out of the zone, so everyone should think it's a break out. SLs of bears are hit and they're kicked out of the market, while bullish pending orders are hit as well and so bulls are sucked into the market putting them in a losing position. That's also the reason why the more a S/R line is hit by the market, the weaker it actually becomes (not stronger as many people may think). The following picture shows a trap on each side (not news related!):



Also drawing S/R lines or zones need some exercise. Switch to one or two tfs higher to have an overview of important levels. If you have issues to see the levels, switch to the Close line chart.

 
That's how the rough model looks like. 

After you mastered the art of drawing them the market will look much less chaotic for you. It has a reason that the market moves as it moves.

A good video I can recommend is from Rayner Teo:

Happy trading.
Static_S_R.png
Bulls_n_Bears_trap.png


Re: How good is static Support/Resistance?

#2
Nice examples, Krelian ! I always forget to draw resistance or support lines my self, should do it every day from now on, although my PBs and certain moving averages are also good S/R lines, but those are not static ...

Re: How good is static Support/Resistance?

#3
Wulong wrote:Nice examples, Krelian ! I always forget to draw resistance or support lines my self, should do it every day from now on, although my PBs and certain moving averages are also good S/R lines, but those are not static ...
Hi Wulong,
I noticed krelians demonstrating guy eyes are not parallel/equalized,is it possible he draw same SR lines
Indicator is just a tool.

Use it only if it can benefit you. Leave it if you don't know how to use it optimally.

Re: How good is static Support/Resistance?

#5
Yes, it's a demonstration. Some traders prefer to draw lines, others like zones more. One has to try things out and find his/her own style. With some practice you maybe see them easily. Since I trade scalping on M5 I haven't the time to draw S/R. I draw them only when I'm not sure or know that I could forget them on hectic charts (switching tfs)
Traders on higher tfs should draw the lines because we can forget them quickly and the higher to tf the longer (in bars) they are valid. When the market come back after an half year or longer the first thing traders do is looking for old S/R.

updated the S/R. Once drawn, it's not much work to update them.


Re: How good is static Support/Resistance?

#6
Krelian99 wrote:Yes, it's a demonstration. Some traders prefer to draw lines, others like zones more. One has to try things out and find his/her own style. With some practice you maybe see them easily. Since I trade scalping on M5 I haven't the time to draw S/R. I draw them only when I'm not sure or know that I could forget them on hectic charts (switching tfs)
Traders on higher tfs should draw the lines because we can forget them quickly and the higher to tf the longer (in bars) they are valid. When the market come back after an half year or longer the first thing traders do is looking for old S/R.

updated the S/R. Once drawn, it's not much work to update them.
Dear Krelian,
Generally Support & Resistance are very important in trading decisions. They can be used in different ways using different logic also. I think that S/R can be divided in two groups. One Group is the definition of S/R looking the past ... which is very easy and (almost) obvious ... The second Group is the definition of S/R in real time as it is formed .... which is difficult ...
I believe that the use of each Group has very interesting "Logic" that will help trading ...
My idea is to distinguish the two Groups, so we avoid confusion and we can arrive to the point ...
I agree that S/R can be Lines, Levels, Channels, Zones, Points, Change Direction of a Trend etc.etc.
So it is very nice to determine all different and reliable calculations and definitions ...
Thank you for your attention,
Best Regards
Dimitri

Re: How good is static Support/Resistance?

#7
With real time S/R do you mean fractals or zigzags? If yes, we don't know whether the market will respect all fractals in the future. So, we have to look in history and how the market behaves at these levels. From S/R lines only it is extremely difficult to read and predict the market. IMO, it's just one facette of the big picture.

Re: How good is static Support/Resistance?

#8
Krelian99 wrote:With real time S/R do you mean fractals or zigzags? If yes, we don't know whether the market will respect all fractals in the future. So, we have to look in history and how the market behaves at these levels. From S/R lines only it is extremely difficult to read and predict the market. IMO, it's just one facette of the big picture.
Dear Krelian,
I agree with you 100% ... that is why i have put the difficult part on the plate ... If we can "solve" or give an approach to the "real time chart" (means to find the S/R when it happens ....) by setting the S/R then ... a big success will be conquered ...
Thank you again.
Best Regards
Dimitri

Re: How good is static Support/Resistance?

#9
Hi,
Would you know if there are alternative indicators on Metatrader 4 or Metatrader 5 for something the same as TAS Tools BOXES which appear to be quite powerful for breakouts above or below, or for support and resistance and even the range bound motions?
Thanks :)

Re: How good is static Support/Resistance?

#10
Dear SilverBB;
I tried to attached file but , I could not . I have been using SR_3.mq which is actually issued by Mladen. Pls, try to find from TSD and figure it out how it works .You will be appreciated.
WIsh you have an excellent day


Attachments 3
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