Golden Support and Resistance Rules; Trading Tips

in this video is a look at support and resistance golden rules some of the rules that

i like to use when trading support and resistance stay tuned

hey guys a very warm welcome to you all right so support and resistance golden rule some of the rules that i like to use are when considering trading off support resistance or using support and resistance to guide my trades and they’ve served me quite well you guys can kind of add your own uh if you’d like to in the comment section below some things that you think is really useful to think about whenever you’re trading support and resistance as far as as we know guys literally levels uh the prices held at where you know prices come down to it the price is held

supply and demand is eat in equilibrium and then it comes off it’s a level where the price goes no further

and resistance is to the upside so we all know the kind of the basics of that if you haven’t then go and check out videos like i’ve done some basics are talking about support resistance before number one on the golden rules is thinking zones not lines so um i think i’ve covered this before in a video and a a lot of good feedback from this because it’s such a useful way of looking at things rather than having a traditional line on your chart

where the price comes down and touches let’s say you got at fifty dollars you know have a zone because very often we’re gonna come through levels gonna test very rarely will it hit fifty dollars on the button you know if you have a kind of a zone and use your rectangle tool that somehow times uh allows for thicker zones where maybe it comes to you know 50.25 goes to 49.85 you know you can take in a lot more of the level using a zone rather than a very thin line because then when it’s through that thin line you feel like the support is broken but actually if you’re using a rectangle it’s in the zone where you’re expecting buyers to step

in so it’s a better way of thinking and i really like doing that

number two is support often turns into resistance so your golden rule is if you and vice versa by the way if you’re going through the support and it very often it’s going to come back and test that level and that turns into a resistance level so if the effect goes straight through it doesn’t come back and re-test extending that line out or that zone out across your chart can be useful for free you retrace back and testing that again might offer a little opportunity not always but sometimes you know you can be ahead of the game if you’ve extended that line out it’s come back up you can think

perhaps there’s going to be sellers still sitting there waiting and get a little

scalp trade off that or small swing trade the third thing is

support is stronger in an uptrend and resistance is stronger in a downtrend so what does that mean exactly so if you consider these two little charts here if you’ve got a market that’s down down down down down this one here and then just find some support of the lows yes technically that’s support and that could be exactly the same price value as this one but it’s a lot different in terms of

where it is in the chart and this one here is the price has gone up and up and up and up

then it’s come back down some of the way and

found some support in a level that’s higher so even if they were exactly the same price i know they’re not on this on this illustration but maybe if they were this is far stronger than this then i’d go too far to say i wouldn’t take a long on this because

in the day guys you know the trend is or the weather big money’s flowing and the higher time frame pressure often rules everything and whilst you know wouldn’t put you off taking a trade

in this environment there’s plenty of setups that can occur like this and especially if you’re scalping a little pop-off support isn’t a bad thing to be doing but generally speaking

you know it’s way stronger when you’ve got support you’ve gone through a level you’ve come back

then you find support that’s much stronger than if you come down down down down

and then you’ve found support so bear that in mind and obviously flip on his head

for resistance the fourth thing is guys is that retest

after a break are likely super likely in uh definitely forex pairs because you’re trading

a pair of two currencies but you often find that price will break through and come back and re-test so what does that mean if you’re trading don’t need to start chasing stuff very often you’re going to get a retest you know there’s there’s a good strategy just waiting for key levels to break and then bidding on that key level so in other words you’ve got a key level 100 whatever the market may be rip straight through and you place your bid at 100 market comes back just kisses your level and you get a pop off it and very often guys you’re going to get retest now just a caveat to that in some stocks that’s less likely because the nature of how a stock is trading

versus a currency pair and obviously i’m generalizing a lot here as well but you know a currency pair will often test and re-test and kind of be much more range-bound and much more rotational on its way up a stock can sometimes just rip in one direction because supply the minor balance

uh can be so skewed and that suits some people but it doesn’t suit others so something to consider other fifth thing guys is more touches of a level equals a stronger level so i see some people like writing doing a support level where price has maybe touched it you know

twice in the past you know 10 days and it’s in the middle of a range it’s not really a support level uh the kind of the the difference also say the exception to that is perhaps if it’s a

low of a range in which case one touch is fine because that’s not necessarily support

it’s just a low that everyone’s watching and maybe it’s only hit it once but everyone knows that’s the low for the five days but if you’re in between a range for example you’ve got a couple of touches that’s not going to be decent support level you want multiple touches so it’s proven it’s worth it’s been tested multiple times and it’s proven its worth now something to also add to that which

you know can kind of confuse you but hey says did you trading guys is that yes it’s stronger but it also may mean that the more tests you get and if you’re testing and you’re not bouncing up so much so this is where we kind of get into a little bit more depth and i don’t want to go too crazy here because i want to keep this kind of broad so make sure you subscribe and we’ll maybe go into this depth later on of how i consider you know multiple touches but very quickly

if we’re bouncing off significantly and coming back and touching

significantly in touching that’s the best support level you can get difference being if it comes down touches it bounced off a little bit and just keeps tagging it tagging it tagging it tagging it then yes it you could consider it as strong but the fact that the bounce off it is very weak is quite telling and say okay i need to be very very careful now buying this support because even though there’s a buyer there or sales are shutting off at that point there’s no one else behind it bidding up way above it when we get a significant bounce off support you can say okay well actually there’s a buyer still sitting there but there’s also other buyers who are willing to step up and buy this or sellers are backing off completely so something to think about uh where are we number six guys fake outs often occur so be ready so this is something i think is much more likely in certain markets than others commodities

currencies are indices you have a situation where

very often market will fake out through and then reverse

so be ready for that be ready for the fake out by perhaps not taking a full

clip if it breaks the level perhaps not even taking a trade if it breaks the level waiting for a pullback perhaps looking to just fade every break and play a real aggressive game of i’m just going to step in front of every break because i think over time that every break is going to be false or at least pull back to a level so just think about and also the kind of little shortcut for this guys just go back and look at the chart and the market you’re trading and the time frame we’re trading and just see exactly what’s happened how many times have you broken a level and it’s been a clean break and ripped on

how many times you’ve broken level and pull back that gives you a clue as to how the price could behave when you take the trade the worst thing you can do is to force your our desire onto the market and you look back and go it’s never had a clean break it’s never ever broken out and done a five day run without looking back so why should i expect it now and then you go back and go well actually it always breaks cleanly when it’s done in the past six months of my chart it’s always broke cleanly so i’m just gonna hit i’m gonna hit the offer as soon as it breaks through so it’s again

putting your framework in

the whole market structures to see if it fits rather than trying to hammer it in when it’s not ready so support and resistance golden rules guys those are mine let me know yours in the comment section below if you want to check out channel sponsor there in the link below are there in the description box below take care bye you

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