When Support becomes Resistance, and Resistance becomes Support
Hey TradingViewers!
How's it all going!
I was planning my upcoming trades for this week and came across a great example of When Support becomes Resistance, and Resistance becomes Support! I'll explain why i place each of the levels, and why i place them where i do, why that's important and perhaps most importantly, how to trade it! So let's get to it.
I've labelled each of the support, resistance and trend lines with a number starting 0, ending at 5. Let's begin with 0.
I place line 0, simply put, where the price has not been able to push any higher. I place it above the price action, and extend right. This will be our top level resistance.
Line 1 is our downward trend line. I start the line above Line 0 and draw it so that it crosses the tops of the rejected candles. I extend it down and to the right. The reason i place it across the tops of the rejected candles is because each time the price has hit this line, it's been rejected, which is a good sign you have a true resistance trend line.
Line 2 is the first or our horizontal supports. i determine there is support here as price has moved significantly counter to the current trend. I begin the line near to the open or low of the candle, and extend right.
Line 3 is the second of our horizontal supports, and you guessed it, it's been added because price has moved significantly counter to the current trend, and as line 2, I begin the line near to the open or low of the candle, and extend right.
Line 4 is an interesting one, and something to take especial notice of. Line 4 is the first trend line which is uptrending. The reason this is important is that it could be a strong signal that a trend reversal is coming. I place the start of the line at the point, (that's right, you guessed again), where price has moved significantly counter to the current trend, and i extend right, connecting the higher lows.
Line 5 is an extension of Line 3, and a great visual representation of resistance turning into support.
But what are the circles? WHY ARE THERE CIRCLES?
The circles are to identify (in multiple instances) where support has turned into resistance, as in Line 2 and Line 3, and resistance has turned into support, as in Line 5 and also the cross of lines 1 and 4.
So i'm sure some of you are now asking:
"Okay so i know how to place support, resistance and trend lines but how does that help me? Where's the profit in all of this?"
Well I'm glad you asked and it's in a link in the Related Ideas below, called How to identify trades using Support and Resistance.
Thank you all for your time, i hope that it's been helpful,
For_The_Many
How's it all going!
I was planning my upcoming trades for this week and came across a great example of When Support becomes Resistance, and Resistance becomes Support! I'll explain why i place each of the levels, and why i place them where i do, why that's important and perhaps most importantly, how to trade it! So let's get to it.
I've labelled each of the support, resistance and trend lines with a number starting 0, ending at 5. Let's begin with 0.
I place line 0, simply put, where the price has not been able to push any higher. I place it above the price action, and extend right. This will be our top level resistance.
Line 1 is our downward trend line. I start the line above Line 0 and draw it so that it crosses the tops of the rejected candles. I extend it down and to the right. The reason i place it across the tops of the rejected candles is because each time the price has hit this line, it's been rejected, which is a good sign you have a true resistance trend line.
Line 2 is the first or our horizontal supports. i determine there is support here as price has moved significantly counter to the current trend. I begin the line near to the open or low of the candle, and extend right.
Line 3 is the second of our horizontal supports, and you guessed it, it's been added because price has moved significantly counter to the current trend, and as line 2, I begin the line near to the open or low of the candle, and extend right.
Line 4 is an interesting one, and something to take especial notice of. Line 4 is the first trend line which is uptrending. The reason this is important is that it could be a strong signal that a trend reversal is coming. I place the start of the line at the point, (that's right, you guessed again), where price has moved significantly counter to the current trend, and i extend right, connecting the higher lows.
Line 5 is an extension of Line 3, and a great visual representation of resistance turning into support.
But what are the circles? WHY ARE THERE CIRCLES?
The circles are to identify (in multiple instances) where support has turned into resistance, as in Line 2 and Line 3, and resistance has turned into support, as in Line 5 and also the cross of lines 1 and 4.
So i'm sure some of you are now asking:
"Okay so i know how to place support, resistance and trend lines but how does that help me? Where's the profit in all of this?"
Well I'm glad you asked and it's in a link in the Related Ideas below, called How to identify trades using Support and Resistance.
Thank you all for your time, i hope that it's been helpful,
For_The_Many
Thanks, as Always
For_The_Many