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Dear Traders, In aforementioned video, Al mentions about different types of of S/R and best depends on context; Any S/R can be best depending on context/situation and strength of S/R. How as trader we can identify this in live market? Do we have to mark these levels and see how price behaves at/near S/R?
Another question is strength of S/R once it is broken. As an example assume that there was support which market respected for multiple times and prices reversed from support level. On Day 7 this support was broken strongly to the downside. Market was below this support (now resistance) for sometime, and then broke above strongly on Day 11. It rallied for few days and is again approaching this level. Since this level was broken by market twice (once as support and then as resistance), does this level still have same strength or same influence on the price?
Thanks in advance for your help.
Cheers!
Amol
Hey Amol, When it comes to support and resistance the strength of them depend on how the bars react in that price.
- Al says for a BO you would want a strong trend bar and follow-through(the more follow through the stronger the BO).
This is how i see a BO. Now, we have to think about the first support we face on a bull trend.
- For me it's the low of the prior bar and the last support is mostly the low of the bull leg.
- In between the two extreme of support we have multiple different supports like EMA 5 and above(because people use different EMA's) all the lows of the bars that were made on the bull leg.
More the support get Broken out properly, the weaker each support that are yet to be broken.
For example: https://www.youtube.com/shorts/-N3DdDVZwEg
Look at the above video. If only there were one rubber band in that sling shot the bullet wouldn't travel far. but, more the rubber band more distance and speed.
like that more the support not broken properly, the stronger the overall support is.
Hope this helps.
S/R comprise of a few aspects, and experience will have to be a guide. 1. Horizontal S/R is based on how market auction works and resting orders for where stops and limit order profit taking exists. These areas are most easily observed through noting where the greatest trading volume exists on the price axis because these are "turning points" when the bias changed. An easy way to see this visually will be to attend the daily live webinar and observe Rose's chart at the beginning of the day for the red and green zones. She explains it well and the zones correspond to the areas where higher volume and change points occurred. 2. Momentum based S/R are channels and trendlines. These track the acceleration and deceleration of price directional movement. As an example Al's 75% of channel breaks are returned within 5 bars. This is a momentum based S/R. Also, the tightness of channels (wide vs tight).
Both aspects are needed to really understand how the market moves through both price and time. The horizontal aspects are the easiest to absorb initially.
Hopefully helpful and good trades to you!
