Thursday, November 19, 2009

Support and resistance



Support and resistance are probably the most talked elements of technical trading. Some trader’s only trades using S/R, they buy the support and sell the resistance. Of course nothing is fool proof, some days even the best of the best set up wont work, that’s trading. Cost of trading is some losing trades, you have to accept it.

Facts that you need to know:

The more times the old support/resistance levels are tested the more forceful it is if it is violated.

After a support level has been broken, it often acts as a resistance level; this is because traders want to limit their losses and will sell later,when prices approach the former level.

Easy way to trace historical support or resistance is to look for V shape pattern in the chart.
In the chart above we can see that price made several V shape patterns.

Wednesday, November 18, 2009

Valid trend line




New traders, who want to make money with high probability set ups, should get used to drawing trend lines. Tend line could be the simple tool to profit from the market, but please draw it on the bigger time frame and move to smaller time frame to execute the trade. Some Of my fellow traders send me e-mails about a valid trend line. From my way, when we are able to connect to points (HH,HH and LL,LL) we get a trend line and when the price touch the line third time and bounce back to the original trend we can say it’s a valid trend line .