Thread: How to use Support and Resistance Effectively
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Old 06-21-2007, 12:10 PM
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Malcik Malcik is offline
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Quote:
Originally Posted by bubble View Post
The upper line on your chart was resistance, at the time you posted that area had already been tested twice the trend on the 240 is up, the trend on the daily has changed over the last few days to up what does this tell you (the trend is up) so taking this trade would be countertrend.

Here is a rundown of the order to confim a trade.

Wait for a market turning point(price to turn down/up from a peak or trough.
Check the trend in 2 timeframes higher.
Trade only in the direction of the trend.
If you take a counter trend trade make sure that you are 100%+ sure you know what you are doing.
Mark the peak at the turning point as s/r check higher charts to confirm, the more that match the better if s/r only matches trading timeframe but is with the trend thats fine.
Do not enter trade immediately ,if you think the price is running away from you before you entered , think again, its a trap , you will end up watching the price retrace to retest.
Do not trade breakouts (breakouts are a weak form of trading), you will lose more than you will win.


REMEMBER BUYERS ENTER THE MARKET AT SUPPORT
SELLERS ENTER THE MARKET AT RESISTANCE.
Hi bubble,

Thanks for continuation of this thread. However, I'm a bit confused right now. Earlier you said (or I understood it the way) that:

You waited for a market turning point (for example for a top)
You marked the _last support before the peak_
You waited for the price to break out back to the downside
You waited for 1st retracement as a test that the role reversal works and that the support now becomes a resistance before a price's way down
You waited for the _2nd retracement_ for short entry

(Reverse for long entries)

Now you are saying that:

You wait for a market turning point (for example for a top)
You mark the _peak itself as resistance_
You wait for the _1st retracement_ for short entry

So now I'm just confused which one of these you actually follow... or do you trade both of them?

Thanks again for putting your time into this thread. I can't wait till next lesson.
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