Home Trading Strategies Do You Make These Support and Resistance Mistakes?

Do You Make These Support and Resistance Mistakes?

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Do You Make These Support and Resistance Mistakes?

hey hey what’s up my friend so let me ask you a question I feel though you know seen the price come in to support anything oh this is a strong level of support it’s gonna hold so you buy the next thing you know the price match true support and you got stopped out or how about the price came into an area of support and then he made a huge rarely away from it a huge bullish move but the problem is you got stopped out of your trade before you can even take part in the move so has any of those happen to you before because if it’s a yes right then today’s training is for you because I’m going to share with you what are some of the most common mistakes right traders make when trading support resistance and how you can avoid it but first if you’re watching this video for the first time right hit the thumbs up button and subscribe to my youtube channel the link is below just hit subscribe in the thumbs up button this way whenever I publish a new training you’ll always be updated sounds good then let’s get started first thing for us right the more times support is tested the stronger it becomes if you have you heard of that saying before or the textbook or forums you know you see stuff like oh the more time support is test that the stronger it becomes well that’s not true right the truth is this right is that the more times support gets tested within a short period of time the weaker it becomes and let me explain why so let me just give you an illustration so let’s say right I’m just scared of this fugly lines okay so let’s say this is an area of support let’s say this is an area of support right and price goes up comes down and test it multiple times so you can see that you know support is an area where potential buying pressure would come in so let’s see there is a certain limit order to buy it support maybe from a hedge fund institution whatever let’s say you know it’s Wafaa one hundred million dollars worth of buy orders first time it comes up right it feels up maybe let’s say 50 billion okay then he rarely is comes back down it fills up the remaining let’s say 20 million a day rallies comes back up fill up 10 million comes back down fills up the remaining 10 million okay then eventually there’s no one left to bind the price breaks down so you can see that the more times price right retail support within a short period of time the more of this buy limit orders get filled autumn or this by orders get few and once all this by orders get feel who’s left to buy me no I don’t wanna be buying so that’s where you get right the more times price retest the part within a short period of time the likelihood it will break down so this looks something like ad sending triangle okay and the opposite is the ascending triangle let me just share with you an example right so over here you can see Bitcoin that illustrate this concepts pretty well so you can see that it’s a support around the 6000 level okay price came into support really once came back down really came back down really came back down slightly and then prix now so you can look at this right that just by looking at this price section you know that this market is getting weak right if you just look at the the so-called swing of the rally right the first time is pretty strong right nice big bullish candle second time you know still strong but not quite as strong as the first time at that time get weaker and the fourth time is really really weak right all the small range candle so this is a sign to you that you know the buyers they have difficulty pushing the price up higher and this right to me is a sign of weakness not a sign of strength so whenever you see right the more time support is being tested within a short period of time that’s a sign of weakness and moving on right you’ll see and not example over here this is a the opposite or you can see that over here again this is resistance price approach resistance sold off approach resistance sold off approach resistance and then it’s all off a little bit so now you have a series of higher lows into resistance so is this a sign of strength or weakness this is a sign off strain rise it shows you that no the buyers are willing to buy at this higher prices in the sellers they have difficulty pushing the price lower first time they push the price you know pretty strongly towards the downside here here as well then after which the subsequent sells selling pressure from the sellers got weaker and weaker right weaker or weak over here so this is to me a sign of strength right from the buyers they are willing to buy and at this higher prices okay then we lead to a breakup okay let’s see if I can find an example later is another one Bitcoin again can see again right series of lower highs coming to support this to me is a sign of weakness right there the market is about to break down lower so let me just see if I can find an example to illustrate this concept this concept is important okay so another one over here you can see this one not as clean as the Big Horn example but still you can see a series of lower highs coming in to support ok lower highs come in to support again it’s a sign of weakness the market is weakened is likely to break down ok so the key thing here is gain right higher loss into resistance is a sign of strength and lower highs it’s to support it’s a sign of weakness number two right setting your stops blow support right so here’s the thing right when you set your stops let’s say just below support or above resistance it makes it easy for you to get stopped hunted what do I mean by there so let me ask you this question right so let’s say that the market is in a range right and it comes into support before I rarely solve it spikes down lower then it goes up higher so when you buy it’s a pot right on the brief rally over here you set your stops below this low or below this low you get stopped up by this spike now lower have it happened to you or how about this right market could be trending let’s say the market is trending market is trending like this ok then market breaks below this uh let’s say market goes down then it breaks below this swing low so I thought that’s a break off single oh there’s a break down you go shop and where do you put your stop-loss well we put your stop-loss just above this swing high and what does the market do it comes up to the swing high and then collapse lower and then you get stopped up again familiar so this is the mistake to avoid right you don’t want to be putting your stop-loss just below support or above resistance you want to set it a distance away from support resistance to avoid this type of you know stop hunting that goes on so let me just give you an example right so if you look at this one over here New Zeeland in here ok so you can see there this is the example that I just shared right so you can see over here right what price it looks bearish ok market looks bearish I break down of this swing low right this is a trend continuation trade of a series of lower highs and lower lows market is in a downtrend let me go short when you put your stop-loss you put your stop loss just above this swing high right after all you know this is a way the the hi student get invalidated because if the price breaks above the swing high or the down train is over so that’s why you put your stop loss at this swing high then what happens well the market right somehow somehow knows what you’re doing right he just stopped loss above this highs swing it a second time right so we can see swings and it twice right once and twice before he finally reversed what’s the downside okay so you can see this phenomenon happening happening again right now price right hitting down lower then it swings up take out the highs comes back down swings it at that time before and right now possibly you know hitting down lower finally so you can see that traders who said their stops just before resistance right they are gonna get stopped out okay so this is important don’t set your stops right just below support or above resistance let me give you another example this one over here on oil this is the low on oil price came down all the way towards this lows spike through the lows before it rarely is up higher again so here’s what happened right price right on this oil it came down all the way down below this loss of support before you did the Falls break and really up higher again so you can see there again right traders traders who set a stop loss below this low but stopped out over here and then this phenomenon happen again right traders again we said that stops above this Heinz right maybe they they went sort of price here Apple higher start to reverse heaviest loss above this high so maybe even above this highs well market spike up all the way and then reverse so again sending your stops above this highs and this is right would likely have got a new stop lot of the traders as well before the market could even move in your favor so now the question is how do you set your stop loss right in such a way that you know it prevents at this time of hunting from happening to you so here’s my suggestion right let me just give you an example let’s go with just a New Zealand yet so let’s say New Zealand yen okay right now the price is at this area of resistance right you know that you don’t want to just set your stops above the heights you might get stopped out on a spike what I do is use the ATR indicator to help you add a buffer to your stop-loss okay every to range I completely go with our 20 period ATR and I use the SME Monday makes much of a difference just my preference and you can see that right now one ATR is wolf about 60 pips so what you want to do is to find out what’s the highs over here and you add on 60 pips that’s it okay so let’s see the highs is currently let’s see the $70 all right so your stop-loss would be at 70 dollars and 60 cents then is your stop-loss or you give it a 180 our buffer over here and the 180 our buffer can be you know find out can be found out using the the ATR indicator okay so that’s how you would go about setting your stop-loss so if that’s the case right your stop-loss would now be somewhere about here okay let me just change this to red color so this means right even if the price let’s see if them even enterprise would to spike up higher and come back down you will still likely be in a trade because your store is now away from support resistance is away from this market structure where it’s prone to stop one thing make sense okay no moving on right another mistake that traders Megara is that they buy a chop move into support what do I mean by this a chop move so here’s the thing right whenever you trade support resistance right you want to be buying right when there is little obstacles in your way so for example you look at this price goes up comes down comes back down the support this is the type of price section that you will be buying when there is just one nice clean move into support try this to me is ideal because the nearest obstacle in your way is possibly at this area of resistance over here so your profit potential is pretty decent from here to here let’s call it your profit target right it’s pretty decent now there are times right where you don’t get a nice clean move into support sometimes you might have something like this which is very common some time you might get something like this price follows a choppy move into support now if you were to buy in this support right where is the nearest obstacle ask yourself if you look at this chart the nearest obstacle is now it possibly it is swing high over here so this greatly reduces your profit potential now your profit potential also need this portion here because there’s all this lower highs right there is in your way where potential selling pressure could be looking around so let me just you know give you an example again so if you look at this uh this shot of dollar against the Indian rupee so this is an example of a setup that I don’t want to be buying let’s say you know this is an area of support right if I’ll be buying right now the price right will be coming shortly into this swing high over here and that is an obstacle in my way right I would very much prefer a nice clean move into support right so my profit potential is much uh it’s much more okay so I’m not example you can see over here again right you don’t be buying at this highs because over here is just the swing high we’re selling pressure could be looking around to move the market against you try to push the price against you so again you’d want to be buying right where the price is near obstacles when it’s you know just in front of for example in front of resistance and you don’t be shorting right just a hit of support so how should you you know treat this data right so the way I do it is that I like to see a nice clean power move into a level so for example this is what I call a nice clean power before I see concede up the market just came down so strongly into a level so I know they’ve out to be by let’s say on the break of the reversal of this candle the nearest obstacle in my way sale is zero at this swing the high over here so there’s a distance right for the price to move in my favor before you face an obstacle make sense okay so let me see if I can get you another example another one is a pound dollar as well if you look at this at this reversal the nearest obstacle in my way is that this swing low over here so there’s a distance right where the price can move right where there isn’t any opposing pressure to commit and you know push the price against me so this is what I mean by I look for a clean move into a level usually whether there’s a clean move there’s a power move into a level right the reversal is is little more Swift that’s why I hid right trading choppy move into a level SX split earlier okay so that’s the third thing that I have for you right don’t buy a chop move into support of resistors there’s too many obstacles in yourway it reduces your profit potential and there’s a lot of levels right or areas on your chart where the opposing pressure cooker little twist the direction of the treat for you and finally the fourth mistake right is that traders they treat support/resistance as lights on your chart and here’s the thing support resistors they are not lines on your sure even though you saw that drone a drone every slides by treat them as an area why is there and the reason is simple right there are mainly no two groups of traders are there one is we call it the formal traders the fear of missing out traders so for example whenever the price briefly touch it to support or just come into it area of support they could want to buy they don’t want to miss the move alright so this is the traders who have the fear of missing out there by as soon as possible when price reaches support and then you have another group of traders called the cheapo traders these are the group of traders that want to get it at the best possible price and the absolute lowest of support and absolute highs of resistance that’s where they want to enter the trip so when you have this two group of traders right that’s where you know support becomes an area you’re sure this is where you know for more traders want to edit wants to enter at near the highs of support and ship or traders wants to enter at the lows of support so when you mesh this to group of traders together support becomes an area on your chart okay and one way right you can go about treaty as an area on your chart is to draw as an email so in this case right what I kept I could do if I want do is I could draw support a resistance as areas on my chart so you can see I use the rectangle tool in this case I can draw it like this so I see this becomes an area something like this okay let me just do another example so the case of New Zealand dollar again I could just do like this okay or how about the New Zealand yen one the one where we saw there’s a lot of something going on could even do it like this so this is how you can treat support and resistance this area on your chart so this means right let’s say we just do for this lower one as well okay so this means if the price right when it comes down lower and it touches here you donate main prices and it area of support right you want to be alert to potential buying opportunities at the same time at the back of your head right you also know that this is an area at the price good deeper into support possibly able to disclose before it reverse so now once you look at it as an area on your chart not a line on your Chad right you have all this a plane a B and C at the back of your head right knowing what to do right if the market starts to show sign of reversal just because you treat it as an area on your chart not a line okay so this is important or if you always struggling right to identify your support resistance level treat it as an area use the rectangle tool like I just shared with you right and I believe that you’ll help you spot your your support resistance areas better so with that said here’s a quick recap right the more time support resistance is tested within a short period of time the weaker it becomes number two don’t set your stop-loss just below support or above resistance it is prone to stop on biggest what I’ve just shared with you number three don’t buy a chop move into support because that reduces your profit potential there’s too many obstacles in your way and finally don’t treat support resistance as lines on your chart it’s an area right repeat after me it’s an area okay so with that say if you wanna learn more about what I do you know more about my trading strategy and methodology what you can do is go down to my website trading with Ranger comm the links above here then just scroll down a little bit right I got a couple of trading guides for you but the one that’s relevant to what we have covered today is the ultimate guide to price action trading right you’ll learn how to better time your entries and exits right we talked about support resistance candlestick patterns and much more so click this orange button and I’ll send it to your email address for free so that’s it I’ve come towards the end to the end of todays video enjoyed it hit that thumbs up button and subscribe to my youtube channel I will talk to you soon you

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