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Arkanoid trading (supports and resistances respected and broken)

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Prague Czech Republic
 
 
Posts: 16 since Jan 2018
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Arkanoid trading (supports and resistances respected and broken)

This thread is dedicated to discuss support and resistance trading methodology mainly inspired by Kewltech blog (yes yes old nasty Kewltech) but not exclusively, he was writing the blog when he was accomplished trader and here we have an opposite. It is not a trading system to be used! It is more a study of how the market moves and why made by author on his own painful experience.

For those who trade or study support and resistance and price action on ANY timeframe.

The goal is to discuss the method and share ideas so the trading system could be developed or improved by a follower.

I will start from the basics and move to the level where the market is out of my knowledge and skill YET.

All of you who trade or study supports and resistances (whether you take it as a line or a zone) know that some of them hold and work pretty well and some fail, like a ball in old video game broke a brick and jumped back or got a super power for a period of time and went through one or several bricks before it reached the turning point. Thats where the name of the thread comes from - Arkanoid, the best analogy I could find.

As I said before the method was described by Kewltech so i will use his terminology in my descriptions.
Further to his explanation I would like to share these 2 youtube videos which I find highly informative on how to find levels:

(oops I am not allowed to post links yet, will do it later, just continue reading)

That's how I find levels. The most strong ones lie in a congestion - bunch of a candles, either horizontal or arc formations called accumulation or distribution. Below you can see some examples:


beleive it or not on lower timefraes some levels work to the pip making retracemt without going inside the zone.

But if only that was so easy...

1st issue: according to the principles of the method the target is the previous level of support (if short) and resistance (if long). Yes it workes but not mainly when the market is so called "flat" i.e. accumulation or distribution is happening on a higher tf so currently price is not trending.
But when the price is in the strong trend? How mane times I saw a good reaction when the price stoped as strong level but retracement was so insignificant and the price continued to move further through. The only explanation I can give is that after testing a strong level in a strong trend going the opposite direction the price may retrace to the nearest level on a lower tf and continue to move in the direction of the trend. For example: the gold is stronly bullish, it approaches a good hourly level of resistance where I expect it to bounce down, my 1st target will be the neasrest 5 min level of support. I will either exit there, or close part of my position and the rest will put stopp loss at break even, or simply trail.
Why? because we are bullish and the trend may give 5min level advantage over 1h level so we will move further up.
Always have entry, exit and stop points!


2nd issue: unlike in my examples below the top of the distribution was penetrated but the price did fall, or the bottom of the accumulation was broken but the price moved up
examples:

explanation: the rule says "if the level is broken the price should go to the next level". So why it did not go? It did but on the other timeframe. It happens very often when the top of the peak or a channel or any other formation is broken and many traders begin to buy, but after 5-10-30 pips it falls like a rock.
What really happened? We tagged a significant level on a higher timeframe, but people who traded a breakout on a lower opened their trades in the wrong direction and they are the authors of famous "false breakout", "stop hunt" etc.
Yes it might be the truth that the marketmaker is attracting new buyers by breaking the last high and then rip them off by 100 pips spike down, I would say it most probably the truth, but the price does not go from somewhere to somewhere, there should be a reason to break the high and to fall and in both cases there are levels! If you don't see it it does not mean it does not exist right?



Oh well i did not expect it will be so difficult to explain your thoughts in a short easy reading way, I did my best. Lets continue later with issue 3: when the price goes through the level like it does not exist.

Even if a single person on Earth read this and leaves a comment I will be happy, discussion and debates is what I am lookng for! Feel free for any questions.


P.S.: I am not mentoring, not trying to look like smart or a real pro cause I am not, I am trying to open a curtain.

Attached Thumbnails
Arkanoid trading (supports and resistances respected and broken)-lvl-exanple-1.jpg   Arkanoid trading (supports and resistances respected and broken)-lvl-exanple-2.jpg  
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