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

Should you have a question about trading with Support and Resistance, here is the place where you can ask an instructor. The instructors are available 24 hours per day during worldwide business hours (Sunday afternoon thru Friday afternoon New York time). You will see the instructor's response posted after your question. (If you need help posting a chart, watch this short VIDEO.)

Dear instructors,

I have been learning few lessons on moving averages, candlestick and support/resistance in dailyfx course.
It's very useful and great by far, as Im quite new I have to watch the video repeatedly at times.

I quite often notice when you mentioned to wait for a candle below/above support/resistance for confirmation in most technical indicators topic.
So I would like to start my first question:

I have difficulty determining the candle close, whether should I use daily chart, 4 hour chart , 1 hour or even 15 mins chart to decide the candle close and whether it has broken the support line?
The thing is looking at 15 min/1 hour chart, the candle may have close below support line, but when looking at 4 hour chart the candle has not yet close and may bounce back above support line.
I know there is no exact answer to this, but I just wonder if you could share your technics/preference when deciding candle close (what's your preferred chart to look at 1 hr, 2hr etc) ?

If you have existing example I can search will be great.

Thank you

Originally Posted by piri

Dear instructors,

I have been learning few lessons on moving averages, candlestick and support/resistance in dailyfx course.
It's very useful and great by far, as Im quite new I have to watch the video repeatedly at times.

I quite often notice when you mentioned to wait for a candle below/above support/resistance for confirmation in most technical indicators topic.
So I would like to start my first question:

I have difficulty determining the candle close, whether should I use daily chart, 4 hour chart , 1 hour or even 15 mins chart to decide the candle close and whether it has broken the support line?
The thing is looking at 15 min/1 hour chart, the candle may have close below support line, but when looking at 4 hour chart the candle has not yet close and may bounce back above support line.
I know there is no exact answer to this, but I just wonder if you could share your technics/preference when deciding candle close (what's your preferred chart to look at 1 hr, 2hr etc) ?

If you have existing example I can search will be great.

Thank you

As a general rule, the longer our time frame, the more reliable our indications will be. Therefore, a daily chart would be the most reliable chart when trying to confirm a breakout, while a shorter term chart, such as a 15 minute chart will not be very reliable.

Thanks Matt, I'll try to focus more on daily.

Im just curious as I see a number of discussions here referring to 4 hr chart or less to enter into trade , I guess I just need time to figure this out.
I have a bad perception that opportunities might be missed by waiting for daily close.
Well, I guess I need to observe more to figure this out one day.
Thanks I think the concept is clear.

Originally Posted by piri

Thanks Matt, I'll try to focus more on daily.

Im just curious as I see a number of discussions here referring to 4 hr chart or less to enter into trade , I guess I just need time to figure this out.
I have a bad perception that opportunities might be missed by waiting for daily close.
Well, I guess I need to observe more to figure this out one day.
Thanks I think the concept is clear.

It is our pleasure.

Yes, you can use smaller time frames, I am just making the point that the longer the time frame, the more reliable the breakout will be. I am not saying that you should only use daily charts. For example, a 4 hour chart would be much more reliable than a 15 minute chart.

Hi Gentlemen,

I spent a Saturday afternoon going through the course so please excuse me if this is posted in the wrong section.

1. I have seen some charting packages have daily, weekly, even monthly pivot points. Would you use daily pivot points on time frame charts less than 4 hours; weekly pivot points for 4 hour and daily time frames charts; and monthly pivot points for weekly time frame charts?

2. The trading signals page has three pairs of strategies. Are these described in detail on the site somewhere?

Cheers

Anthony

I like to trade intraday using 5 and 15 min charts following 60 min trends, but sometimes i can not take advantage of great moves because my hours of trading could be choppy in my little timeframes. Here i put an analysis of EURJPY since weekly to 60 min chart. I see that following major timeframes can be more simple to find opportunities intraday just when price touchs a support or resistance zone in daily chart.

Is it correct to follow 60 min trends and find 5 or 15 min entries there?

If 60 min chart shows a clear trend, but it necessarily does not converge with daily trend is it not correct to trade it? if maybe it is just going to a key zone, can not i take advantage of this counter move in daily, but clear move in 60 min?

Thanks

Originally Posted by AnthonyFx

Hi Gentlemen,

I spent a Saturday afternoon going through the course so please excuse me if this is posted in the wrong section.

1. I have seen some charting packages have daily, weekly, even monthly pivot points. Would you use daily pivot points on time frame charts less than 4 hours; weekly pivot points for 4 hour and daily time frames charts; and monthly pivot points for weekly time frame charts?

2. The trading signals page has three pairs of strategies. Are these described in detail on the site somewhere?

Cheers

Anthony

I would have a tendency to use daily pivot points on all charts since I believe that this is what the majority of traders are doing and reacting to. Here is more on Pivot Points at DailyFX.

Forex Pivot Points

Here is more on the Trading Signals:

http://www.fxcm.com/flash/open-tradi...s-06-25-09.swf

Originally Posted by alejandrofx

I like to trade intraday using 5 and 15 min charts following 60 min trends, but sometimes i can not take advantage of great moves because my hours of trading could be choppy in my little timeframes. Here i put an analysis of EURJPY since weekly to 60 min chart. I see that following major timeframes can be more simple to find opportunities intraday just when price touchs a support or resistance zone in daily chart.

Is it correct to follow 60 min trends and find 5 or 15 min entries there?

If 60 min chart shows a clear trend, but it necessarily does not converge with daily trend is it not correct to trade it? if maybe it is just going to a key zone, can not i take advantage of this counter move in daily, but clear move in 60 min?

Thanks

I think that if you are trading on the 5 or 15-minute chart, you just need to be aware of the trend on the hourly chart. It would probably help if the daily trend in the same direction, but not mandatory. But you do have to expect a lower win percentage trading on the short time frame charts as there is just more volatility that can create poor entries and exits. The longer time frame charts still offer the most reliable technical analysis.

From the chart posted below i was able to identify what i believe to be a clear resistance line (the red line) @ 1.6085 and a clear support line (the green line) @ 1.5670. would these line be accurate??

I often see other areas of 'congestion' and they seem to be other areas of support and or resistance between these two lines... would the lines coloured in blue also count towards support in this 4HR chart of the GBP/USD

Originally Posted by AndyG_fx

From the chart posted below i was able to identify what i believe to be a clear resistance line (the red line) @ 1.6085 and a clear support line (the green line) @ 1.5670. would these line be accurate??

I often see other areas of 'congestion' and they seem to be other areas of support and or resistance between these two lines... would the lines coloured in blue also count towards support in this 4HR chart of the GBP/USD

Nicely done...

You definitely have a good understanding of support and resistance levels on a chart.

Also keep in mind that support and resistance lines do not always have to horizontal. There can also be ascending and descending trading channels as price action moves up or down.

When we discuss support and resistance, think of a room with a floor and a ceiling.

The FLOOR is SUPPORT and the CEILING is RESISTANCE. A large ball bouncing between the FLOOR and the CEILING represents PRICE.

When PRICE (BALL) hits the FLOOR (SUPPORT) it bounces UP. When PRICE (BALL) hit the CEILING (RESISTANCE) it bounces DOWN.

When the PRICE (BALL) breaks through the CEILING(RESISTANCE); the old CEILING (RESISTANCE) becomes the new FLOOR.

Hello,

The trading course videos are great and helped me a lot! Thank you for that!

My strategy is based on buying support and selling resistance together with Candlestick patterns which confirm that there is no reversal. I use trend lines/channels on the H4 chart and my rules are:
- Look at the daily than at the H4
- Don't trade against the trend
- Don't trade ranging markets and look for a clear trend

But as I am new in trading Forex I have some question about drawing trendlines. The USD/JPY H4 chart is confusing me, because it seems there is kind of an up trendline. But I don't really understand how to connect the trend line, how to choose the second point. If I had connected it to any previous price in the last few days it would be broken. There is no price where I can say - this is support and this is a valid point to connect the line! What should I do in this situation? Is there actually no uptrend?

ImageShack® - Online Photo and Video Hosting

We have a downtrend on the Daily chart so I wouldn't enter a long USD/JPY until there is a clear sign of a reversal, which we have not yet. But I was just wondering how should I connect the line.

Please take also a look at the USD/CAD chart. I draw a down trendline and a smaller one. Is this correct or do I have to wait for a stronger resistance? When is the right moment to connect a trendline with the second point?

ImageShack® - Online Photo and Video Hosting

I hope my post was understandable and you see where my problem is.

Thank you!

Regards,
DUBAI

Originally Posted by Dubai

Hello,

The trading course videos are great and helped me a lot! Thank you for that!

My strategy is based on buying support and selling resistance together with Candlestick patterns which confirm that there is no reversal. I use trend lines/channels on the H4 chart and my rules are:
- Look at the daily than at the H4
- Don't trade against the trend
- Don't trade ranging markets and look for a clear trend

But as I am new in trading Forex I have some question about drawing trendlines. The USD/JPY H4 chart is confusing me, because it seems there is kind of an up trendline. But I don't really understand how to connect the trend line, how to choose the second point. If I had connected it to any previous price in the last few days it would be broken. There is no price where I can say - this is support and this is a valid point to connect the line! What should I do in this situation? Is there actually no uptrend?

ImageShack® - Online Photo and Video Hosting

We have a downtrend on the Daily chart so I wouldn't enter a long USD/JPY until there is a clear sign of a reversal, which we have not yet. But I was just wondering how should I connect the line.

Please take also a look at the USD/CAD chart. I draw a down trendline and a smaller one. Is this correct or do I have to wait for a stronger resistance? When is the right moment to connect a trendline with the second point?

ImageShack® - Online Photo and Video Hosting

I hope my post was understandable and you see where my problem is.

Thank you!

Regards,
DUBAI

Unfortunately I am not able to view the charts that you posted. We are not able to access ImageShack through the forum. You may simply want to use to copy the charts in MSPaint and then post them as a jpeg.

On the USDJPY 4 hour chart I have posted how I would draw the trendline below. Once a previous trendline gets taken out, we must "recalibrate" and draw a new trendline (if it fits) as conditions change.

On the USDCAD pair I am not certain which timeframe you are referencing.

Keep in mind that any two points on a chart can be connected with a straight line. One of the keys in drawing trendlines is that three points will need to be connected by a straight line to confirm the trend line...two points connected may work out but nothing is confirmed until the third point can be connected.

If you would care to repost the charts as jpegs I would be happy to take a look at them.

Hello Mr. Krivo,

I thank you for your answer.

Here are the charts I was talking about.

Originally Posted by Dubai

Hello Mr. Krivo,

I thank you for your answer.

Here are the charts I was talking about.

You are welcome and thanks for reposting the charts.

In a downtrend we want to focus our attention on the upper trendline...trendline resistance. Each time price trades up to that level and respects it, a trader could short the pair with a stop above the trendline. The opposite would be true in an uptrend as we would be observing trendline support.

Remember the "three touch rule" for confirmation of the trendline. On the USDCAD chart, the second trendline has two touches by price but it would need a third touch to confirm the line such that it could be used in trading.