Suport/Resistance

10 Feb

Some general rules for identifying transactions with limited risk and high potential:

Identify areas of support and resistance analyzing different timeframes
Look for those situations in which the distance between the support and resistance is highest and where price approaches support (for long) or resistance (for short), that allows transactions with limited risk (the distance between stop loss and take profit is the largest)support resistance
Place limit orders or wait for the optimum time (the decision is influenced by emotional factors and strategy / discipline. If you are worried that you will miss the moment you tend to act quickly, sometimes too quickly, and if not you tend to wait for confirmation or increase from support, or return after an attempted breakthrough of support. If emotions are too high you tend to place pending orders, buy limit in this case)

You will enter in transaction when the price is at his minimum support in uptrend (minor, intermediate or primary) because the probability the market to move against us is smaller, and if the surface is pierced, that is the signal that tells us we have to come out with a limited loss .

S / R is not necessarily a fixed price, but rather an area (expressed in price and time).

Why areas? Because:

Traders perception is different and sometimes subjective
Different traders can draw different trend line, or use withdrawals / different extensions (Gann or Fibbo)
Traders temper is different, some are more conservative, others more aggressive

Attention! It is not necessarily to know what is right, but to correctly anticipate what the market will think soon.

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