Thread: 1) Do you have a question on Support and Resistance?

Originally Posted by SWisdom

James thanks for the reply. As I drove from South Carolina to Alabama yesterday I had time to meditate on my questions. First, I have already done what you suggested. I’ve downloaded historical data (2004-Present) and have determined historically the probability of touching the different S & R levels. Yesterday after visiting with some folks I was able to determine that by Bayes’ Theorem that I would divide P(R2)/P(R1) and get the probability of hitting R2 after getting to R1.

All of this and your response made me think I should look at the Ichimoku Cloud and look at the statistics on a daily and 4 hour time frame. Do you have any insight into the cloud as S & R?

I’ve also managed to take Mr Krivo’s, How to Create a Trading Edge know the Strong and Weak Currencies; (Ref. 1), and historically plot the data in excel. So I was thinking about trying to use this with support and resistance.

Finally, I like what you said, “its absolutely possible to gauge the probability of each level getting hit - but its going to suffer from the same problem faced by most other technical methods - What happened in the past isn't guaranteed to happen in the future.” I guess that would be variance, IDK? Also, I assume if I found something that was statistically correct 70% of the time (Theoretically) and coupled that with something else that was only 45% it would only be about 35% accurate.

How the heck am I ever going to be a successful trader?

Ref. 1: How to Create a "Trading Edge": Know the Strong and the Weak Currencies | DailyFX

Swisdom,

In my trading, I believe the edge often comes in taking the "best" trades. What I mean by this is taking trades only when they fit your trading plan. Often times these trades will have a positive risk reward of 1:2 or better. Essentially looking for 1 winner out of 3 trades to break even on your account balance equates to 33% accuracy ! If your interested in learning more about trade management, I would suggest the following article linked below.

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Originally Posted by Stephan noel

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Hello Stephan -

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hi there, i would just like to know how we are able to setup pivot point indicator at the netdania charts. i don't get the period parameters. how much period should we set?

Originally Posted by icouldntbelieve

hi there, i would just like to know how we are able to setup pivot point indicator at the netdania charts. i don't get the period parameters. how much period should we set?

Have you used the MarketScope 2.0 Charts? They're great and free to use with an FXCM live or demo account. If you decide to use them, let us know and we'll help you load pivots on MarketScope.

However, on NetDania, please go to Studies and then Add New Study to add pivot points. See Image below:

Is my analysis in the right track?

Thank you for the question and the picture.

We focus on three things when trading the news whether NFP or Presidential Election.

1. The overall trend
2. Trade Size
3. Head fakes (more short term bias)

You have a good hold on the potential moves on the market. However, we have seen lately that "Good" NFP numbers are positive for the EUR/USD because it's good for overall risk sentiment. This is what is referred to when you hear about "Risk On". In other words, people are dumping their US Treasury holdings and finding other higher yielding products which weakens the USD.

We always stress trade size because of the volatility around such an event, you should also consider your trade size wisely.

This is from last year but shows the moves that can happen when the news comes out:



Here is a recent article on appropriate trade size: http://www.dailyfx.com/forex/educati..._for_You_.html

The reason for this recommendation is because of headfakes that happen in the market. This is more geared towards short term traders which it doesn't look like you are but none the less, it's still important to consider. When I say head-fake, we mean that you'll often see the market move opposite the trend and end of day close.

Originally Posted by babu7775

Is my analysis in the right track?

Looks like an ascending triangle set up to go long on the GBP/AUD daily chart.

You did a great job of finding this set up. I'd recommend waiting for price to come back toward the top of the triangle before entry. You can do this with an entry order. I threw monthly pivot lines and a 200 day moving average on here and you'll see that price needs to break through S1 decisively before moving toward the target of 1.57 level near the top of the triangle. The S1 is also where the 200 day moving average sits which is another reason to wait for price to break through before looking at a long position toward the top of the triangle. This trade should be in play for a few weeks before hitting your stop or target given the angle on price action.


Good job and here are a few more things I added to give you an objective view of this set-up.

Originally Posted by babu7775

Looks like an ascending triangle set up to go long on the GBP/AUD daily chart.

What to do? A pair producing an opportunity to trade in both directions. Dangerous in my opinion. I myself prefer to look for shorting opportunities based on the 200 sma.

Great question. There have been some good developments in the EURGBP of late that I'd like to draw your attention to. Recently, our Head Instructor, Jeremy Wagner wrote a stellar article on the competing price patterns he saw in EURGBP.

You can read that article here.



There are three arguments I see for the bullish picture. Of course, money management is the most important thing because nothing is guaranteed.

1st, as Jeremy Wagner points out in his article, an Inverse Head & Shoulders is forming as a 2nd low was tested (head of the pattern) but was rejected.
2nd, Price is now above the 200 Day SMA that you are right to respect.
3rd, If you're familiar with Ichimoku, you'll see that price is now in a Bullish posture and is showing an affinity to the upside.

You could look at an Entry Order when you are comfortable with the set up.

Does your view on the pair change based on the last few days of price action?

Also, what targets do you hold for the stop and the limit?

Best,

Tyler Yell

Originally Posted by babu7775

What to do? A pair producing an opportunity to trade in both directions. Dangerous in my opinion. I myself prefer to look for shorting opportunities based on the 200 sma.

TRADE ALERT: EUR/NZD short setting up nicely. Currently the pair is at trend line resistance from 11/22/2011. This trend line has been respected on a number of occasion. The recommendation is to go short on a rebound of the trend line resistance.

Great set-up and Thank you for sharing. Please keep us updated on the trade progress.

For others who are reading this and would like to know more about trend lines, you can read here: http://www.dailyfx.com/forex/educati...rendlines.html

I hope the trade works out, Babu7775. You always share great set ups with us.

Originally Posted by babu7775

TRADE ALERT: EUR/NZD short setting up nicely. Currently the pair is at trend line resistance from 11/22/2011. This trend line has been respected on a number of occasion. The recommendation is to go short on a rebound of the trend line resistance.

TRADE SET UP: Trend trading on the 2hr chart presenting opportunities on trading the GBP/JPY(one of my favorite pair to trade) and CHF/JPY. By using the ADX indicator, we can conclude that the pairs are trending. By drawing the trend line we can conclude that it is an up trend. Therefore, we will be looking for opportunities to buy. The recommended entry to go long should be when price action bounces off the trend line.

Happy trading!

Great eye, Babu7775. Keep us updated on the trade.

I like your use of the ADX as well as the foresight to buy any dips in JPY pairs.

If anyone wants to learn more about the ADX, please reference this article.

Anything against the JPY has been on fire lately.

Originally Posted by babu7775

TRADE SET UP: Trend trading on the 2hr chart presenting opportunities on trading the GBP/JPY(one of my favorite pair to trade) and CHF/JPY. By using the ADX indicator, we can conclude that the pairs are trending. By drawing the trend line we can conclude that it is an up trend. Therefore, we will be looking for opportunities to buy. The recommended entry to go long should be when price action bounces off the trend line.

Happy trading!

Hello,

I feel that trading with support and resistance especially using daily and weekly charts with pivot points is a very effective way of trading. Here are my problems with trading with these tools:

1) When I put my trade pending order just on support or resistance it often misses the entry just by a bit and goes in the the direction that I was hoping for it to go into but I never realize gains because I am not in the trade.

2) If I am more conservative and wait for candlestick confirmations. The market has already moved in the direction that I am thinking it will move into and I will lose on pips again.

3) Sometimes the levels of support and resistance are broken and by the time I realize this it is often too late and I have incurred losses.

4) Once a support or resistance is broken it often keeps moving in the direction of the trend. How do I find the next support or resistance that I can buy or sell off of which would have a high chance of holding.

If you could help me with these questions I would be grateful.