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Arkanoid trading (supports and resistances respected and broken)


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Arkanoid trading (supports and resistances respected and broken)

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  #1 (permalink)
Prague Czech Republic
 
 
Posts: 16 since Jan 2018
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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.

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  #3 (permalink)
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Smth went wrong and images of examples of how I find levels are at the bottom instead of being right in the text, sorry for that

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  #4 (permalink)
Prague Czech Republic
 
 
Posts: 16 since Jan 2018
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Lets review Friday Gold price action, look at this 1 chart (1st picture).

boxes are areas of congestion where I look for levels,
levels are marked with black horizontal lines,
"long" and "short" are directions of trades opened (each marked with a letter from "a" to "b")

and finally the yellow line - the price itself, does not it look like a trajectory of the ball jumping between bricks? lol
you can call it arkanoid, you can call it Super Mario, call it as you want as long as it works!

And here is how it looks to be traded live just for explanation purposes (2nd picture).
This is the tick chart, a lower tf to the 1 min chart.

each "set-up" on 1 min corresponds to the deal on a tick, "a" to "1", "b" to "2" etc.

the 1st sell was opened at around 1330.60+ and it was a sell, usually my tp should have been at previous lvl = where long "3" was opened, but I saw a nice level to be tagged much lover which I was sure we are going to on a higher TF so I placed my TP right under the low before I entered long. Yes this long was in a drawdown for several hours but you remember that spike down? My TP was slipped so I got additional pips, I hate when my stoploss is slipped due to spike but slipped take profit is (and we tagged a lower level on a higher TF a just said)
2nd deal was a buy, on a ticks you can see a swing I bought from much more clean than on 1 min don't you? TP was right above previous high.
3 and 4 and 5 are the same and what I like with such trades is a minimum drawdown and you catch almost all moves, so while 4h or 1 day chart traders are making their decision you are pipping on ticks with such face
There is nothing wrong actually to trade 1h,1d or even 1week charts, they are to be traded the sameway! I just can't wait for such long lol.

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  #5 (permalink)
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Posts: 16 since Jan 2018
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This post is not directly related to the method but I think it is important.

The spike I described in previous topic when gold spiked down and tagged my level on a higher tf, please have a look at this chart. It represents 4 charts one above the previous from 3 brokers and a Comex Futures chart, they are hard to be read separately on this picture so I pointed a low of a spike on each of them with red line. I also highlighted a huge valley which the price tagged and what caused it to rise for over 200 pips.
Just for your information. CFD brokers did not allow to enter this long to their clients because their prices simply did not go there.

(I mentioned these particular 3 brokers cause I am provided to see their quotes. In no way this topic is to give a negative opinion about any of them. So let it be on them lol)

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  #6 (permalink)
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See attached 2 pics with description of how levels work. And 2 charts (1H and 4H) of Gold futures with example.

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  #7 (permalink)
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Posts: 16 since Jan 2018
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These are 2 links that I mentioned in my first message which I can't edit now

(dear admin if you read it can you please replace "(oops I am not allowed to post links yet, will do it later, just continue reading)" with below 2 links and delete this message, thank you! so it will be more readable)

https://www.youtube.com/watch?v=yap_Al8z7s8
https://www.youtube.com/watch?v=sxYcGsAUkIE

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  #8 (permalink)
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Find a difference lol.
My previous "theoretical" chart and Gold PA as of today on tick chart with some comments.



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  #9 (permalink)
Prague Czech Republic
 
 
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And now look at Hourly GBPJPY chart, looks familiar


not giving any targets for long or short, impossible to say before the price comes to a level cause it may form a different structure.

But we are in an uptrend so the price most probably will make a new high and should look far to the left to find a nearest resistance.

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  #10 (permalink)
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Bit of mindgames late at night while markets are frozen.

Quiz: what is common between 2 charts below?

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