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Support and resistance indicator
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Created: by Adamus Attachments:15

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Support and resistance indicator

  #51 (permalink)
Trading Apprentice
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Adamus View Post
What I mean here is that actually that bar that breaks out thro the level is still a part of the setup, and the bars that I feel invalidate a level, well, they come back to the level after being elsewhere and go right through it. They don't set up a setup, they don't respect the level at all, they just come quickly from some other price and go straight thro. Does that make sense?

No, I am lost.

Have you seen the video I mentioned?

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  #52 (permalink)
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OK, well without actually digging out the chart, what I mean is that in your example, the market was in the setup, hovering around the S/R level, and then it broke and trended away. For me, that doesn't invalidate the S/R level.

To invalidate it, the market just ignores it. It doesn't come to the S/R level and pussy foot around creating a lot of consolidation at the level, just above or even touching or pushing slightly through, it just trends straight through.

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  #53 (permalink)
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ok, I agree with your description.

Have you managed to code it? Have you defined a set of logical rules for this?

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  #54 (permalink)
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That is what I am working on now. It's difficult and it's made worse by only having short periods to spend on it so I can't really get deep into it for very long. One of the problems is having to work 9 to 5 at the moment and try to make sure I find time to commit time to all the stuff I want to do. That would be one of the reasons I didn't watch that video you linked to - it's 75 mins long with no executive summary

One of the first things that I'm tackling at the moment in terms of S/R and market behaviour in the setups zones that I can see (but not yet define) is trying to define an existing trend. I'm experimenting with HH/HLs and LL/LHs, and just being above an MA or below an MA, and also range definition.

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  #55 (permalink)
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I think it will be enough enough if you go somewhere at the beginning of the video (say 10min) and watch just 5 min of it. You will the the main idea that valid S/R are penetrated only by BIG CANDLES, which means great force needed to overcome it.

I'd say don't mix too many problems at once. ASSUME you have a trend or range (through a parameter) and work on the other (S/R) problem.

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  #56 (permalink)
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I think the prevailing higher time-frame trend or range is the primary factor to consider. It's true that the market sometimes breaks the other way, but I prefer to start but filtering the 'other way' out first because that's the way I look at the setups.

Lance stresses the higher time-frame trend heavily - it's not just a whim.

It's all going to be difficult and challenging to automate at the end of the day. Starting off with the higher time-frame trend I think is easier. Anyway I've got a lot of data to test it on.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #57 (permalink)
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Adamus View Post
That is what I am working on now. It's difficult and it's made worse by only having short periods to spend on it so I can't really get deep into it for very long. One of the problems is having to work 9 to 5 at the moment and try to make sure I find time to commit time to all the stuff I want to do. That would be one of the reasons I didn't watch that video you linked to - it's 75 mins long with no executive summary

One of the first things that I'm tackling at the moment in terms of S/R and market behaviour in the setups zones that I can see (but not yet define) is trying to define an existing trend. I'm experimenting with HH/HLs and LL/LHs, and just being above an MA or below an MA, and also range definition.

Hi Adamus, welcome back! nice to hear about more on the S/R indicator. some thoughts about it. I've seen some s/r indicators where there are lines of thoughts about when the S/R line would be invalidated (no longer drawn) like you mentioned. Some think if it interacts with it the first time, that's enough to invalidate , but of course others want more interaction. But most seem to agree a straight break through with no slowing down would definitely invalidate.

As for a "trend detector" there's that old "ADX" indicator where supposedly the DX and DY value is crossed over and the average is above a certain level (30?) then it's supposed to be in a new trend although it would seem to still be a lagging indicator. (aren't they all?)

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  #58 (permalink)
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While I'd like to see a set of logical/mathematical rules as to what invalidates a S/R level, I want to ask if this methodology also accounts for Support turning into Resistance after it is penentrated.

See these examples: Support And Resistance Reversals

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  #59 (permalink)
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The way I think about it mostly without any code to back it up or backtests etc, is that every possible S/R line out there is valid, and even reversed after getting broken.

There are so many different potential S/R lines you can look at. Swing points, pivot points, previous day's H or L, trend lines, Fib retracements, volume / market profile levels etc. They are all self-fulfilling prophecies - or not!

My aim is to take the easiest ones (previous swing points) and wait until the market sets up at the level. Then, depending on other price action as yet unprogrammed for my planned NT7 strategy, I'll take the trade at the level based on a trigger also as yet unprogrammed. Could be just a straight break-out from the setup zone, as opposed to a break-out of the level.

I'm looking for Lance Beggs's break-out or break-out failure price action. In code. Eventually - but first the higher time-frame trend.

@Cloudy - if I was going to use a pre-rolled indicator, I'd probably start by looking at ADX, but not on its own. But I have to define ranges better too, I can't just rely on there not being a trend, at this point in my thinking.

You can discover what your enemy fears most by observing the means he uses to frighten you.
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  #60 (permalink)
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Lance replied to me and gave me this link, which is a related post he had written:
S/R Levels ? When Do They Become Invalid?

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