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Is Support and Resistance Meaningless?
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Created: by wallo101 Attachments:3

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Is Support and Resistance Meaningless?

  #51 (permalink)
Elite Member
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DionysusToast View Post
My take on this is that sometimes levels hold and sometimes they do.

If enough people trade the level, then people jump on board and it perpetuates the move.

S/R levels themselves attract a lot of retail traders and as such are areas that will be gamed. So I think they are poor areas to take a trade but they are area where a reaction can start. So for me - if a reaction starts at a key level, I will be happy to change my bias to that direction.

I don't really care if a level holds or breaks - just that people appear to be jumping on board.

Trade the momentum of the weak hand congestion moving out of the area, best RR you can get with the amount of congestion directly correlated to how strong the move will be out of that area imo.

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  #52 (permalink)
Trading for Fun
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Personally, i prefer a failed SR level, since that level is plenty and if the f.SR have the right amount of volatility its a bit easy to be played at LTF.

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  #53 (permalink)
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I have gone through like half of Adam grimes course and have to say that it's okay, not great, but not bad either. Sometime he only looks at things one way with his statistics and he will tell you what doesn't work a lot, but not what does. I'll continue with the rest of the course though when i feel up to it. So far i've gotten value from it. I'd also like to say i've gotten value from this thread, thank you.

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  #54 (permalink)
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In my experience the answer is Yes and No. I use market cycles and that seems to work.. so you always know where your next move is with respect to what just happened..

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  #55 (permalink)
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wallo101 View Post
I've been watching charts the past week and notice the market does not respect support/resistance and will break through it more often then not. There's got to be a better way to trade and i'm not finding it. Order flow seems to make the most sense right now (i'm not saying it makes sense to me yet, just more sense then trading stuff like support and resistance), but i'm currently looking at charts.

Support is defined as a price below the market where there are more buyers than sellers.

Resistance is defined as a price above the market where there are more sellers than buyers.

Therefore if the price "breaks through" a level where you expected to find buyers/sellers, then you simply had the S&R level drawn in wrong, because traders didn't enter there.

The best S&R levels are; trend lines, trend channels, previous highs and lows, and measured move projections. The most reliable trades come from when you find a confluence of these levels.

Less important but still worth paying attention to IMO; the OHLC of yday/last week/last month (mainly for stocks/indices), fib retracements/extensions (especially 50%, I know it's not a fib number but very often buyers at 50% PB in a bull), round numbers, and risk projections (e.g. 2x risk from an obvious signal bar).

I never found pivot points to be any use. I am willing to learn though, if anybody can point out pivot points acting as reliable S/R on a chart and explain how they got them please do.

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  #56 (permalink)
Market Wizard
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I think some instruments react more strongly around key areas of S/R than others. Crude oil seems to respect these levels more than just about any instrument I have traded.

Failure is not an option
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  #57 (permalink)
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It's the break of key support or resistance that's meaningful, not the levels themselves. They are highly indicative of future direction, both in magnitude and in duration. At least they are for me, in my analysis and trading.

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