Price Action at Major Support or Resistence (Horizontal) - For Intraday Traders
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Thread: Price Action at Major Support or Resistence (Horizontal) - For Intraday Traders

  1. #1
    Thought I'd begin a thread concerning this topic.

    As an intra-day trader, I seem to go short or long depending how price reacts to a major degree. IOW, I stay impartial bias that is 100% and expect a good move from a degree, not a particular direction. That way I will profit from rebound or breakout.

    In my experience, three scenarios associated with price action are typical at a major degree:

    1) Bounce (change)

    two) Breakout (price runs through degree)

    3) Chop (price chops about degree, subsequently finds direction)


    The issue then becomes, could every scenario be predicted into any useful level? And if so, how?

    So today I look for common threads in lead-up price action that give clues as to how price will react at a major degree.

    These are my observations. Please note, that price action observations are made from a 10 or even 30 second candle chart. I expect others will bring their observations, also:


    1) Bounce (reversal)

    a) if a degree has not been touched for awhile and price has not traded close to the degree, a 1st signature change is much more likely.

    B) on many days, reversals are more common to the upside down (when encountering resistance).

    C) on hefty trending days, 1st signature reversals counter-trend frequently fail (then grow to breakouts or chop).



    2) Breakout

    a) Momentum. If momentum is tough entering a degree, price is more inclined to breakout.

    b) Direction. If direction is down moving into a degree, price is more inclined to breakout.

    C) Momentum Direction give a greater probability breakout setup. Although price overeat or can still reverse.


    3) Chop.

    A) Happens frequently around major levels. Price will dip beyond degree, then return the other way, then combine.

    B) Consolidation break-out indiors could be useful here. Fast bollinger bands or alternative breakout tools can be helpful to gauge management at consolidation.



    Putting it all together.

    The idea is to capitalize at least 2 of the 3 conditions stated. Some traders presume a single condition, and focus and trade only that (and profit!) .

    In my experience, here are some drawbacks with this:

    1) Trading just breakouts.

    While I've heard this can operate, chop creates significant drawdown as price tosses around a degree. Further, even some 1st rebound reversals frequently pass a degree by some ticks (triggering limit orders), then slam down (or up).


    2) Trading just reversals. Again, this is sometimes profitable and from what I hear, how many big players trade. But, breakouts slam change traders. And chop can frequently end with a failure to the downside.


    3) Trading just chop. Breakouts are overlooked. And reversals are usually overlooked. Although drawdown isn't as thick, assuming a good chop indior is utilized.


    So how can a trader make sense of that??

    Well, here's how I trade it

    As price approaches a major level, I Wait-and-watch for a breakout. If price reacts to a degree, then place on a change. Then if price retests and consolidates, wait for a breakout.

    Assume breakout gt; change gt; consolidation.


    Be interested to hear how other seasoned traders browse major levels. What they look for. Common price action etc?

  2. #2
    Quote Originally Posted by ;
    Please notice, that all price action observations are made from a 10 or even 30 second candle chart.
    I really, REALLY hope that this is a typo

  3. #3
    Quote Originally Posted by ;
    Well, here's how I trade it :

    As price approaches a major degree, I Wait-and-watch for a breakout. If price reacts to a degree, then place on a change. Then if price consolidates and retests, wait for a breakout.

    Assume breakout gt; change gt; consolidation.


    Be interested to hear how other seasoned traders browse major amounts. What they search for. Common price action?
    You mean you tried this kind of trading? Any example from transactions or charts?

    P.s. Yep, I also would really like to hear other encounter and successful traders utilize this technique.

  4. #4
    Quote Originally Posted by ;
    I really, REALLY hope this is a typo
    Let me guess, you input off hourly charts.

  5. #5
    Quote Originally Posted by ;
    You mean you already tried this style of trading? Any example from preceding transactions or charts?

    P.s. Yep, I also would love to hear other encounter and successful traders use this method.
    Its the way I trade.

    Take for Example that the BRV No Brainer journal.

    Most of these transactions taken are reversals. With a huge enough stop (40 pips) to permit for chop, then reversal in expected direction.

    I exchange the same way, except with much tighter stops. Rather than firing away at a pre-determined amount, leaving a 40 pip cease, and trusting the trade goes way, I go down to some 10 or even 30 second chart and watch price reacts to some degree.

    This way, stops are much tighter = better risk to reward.

    Additionally, I profit from a breakout, whereas pure reversal traders can not.

  6. #6
    Im open minded lets have any examples and charts ?


    best regards

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