There are tons of things that I could write regarding the different ways to trade and what trading methods suits your personality. My goal is to show you how to merge everything together to help give you an edge in your trading. However, I will start by discussing the most effective tools in my toolbox: horizontal support and resistance levels
These are the most important elements of my trading. But it seems that most retailers dismiss them. They would rather follow some green/red light robot than think for themselves.
There are five things that I look at when marking up my support and resistance levels:
1) I want to look at the higher time frame charts. These are the levels with the levels with the highest weight. Banks and large funds pay close attention to these.
2) I am looking for levels that attract a lot of attention over time. (This means that price gets rejected from these levels over and over again.) The other important factor here is that price rejections should occur on both sides. This means that if the level holds as resistance at one point, is then broken and price uses it as support and it adds more weight in terms of importance down the line.
3) I want to see price get to the level after a nice run. If price has to travel 100 pips in a day to get the level, it adds more weight (in my books) that the level is likely to hold. I must add that this is not always the case. However, I usually get a good "heads up" as to whether I should act or stay aside from monitoring live news feeds.
4) I like to see a good time space between when price hits the level and when it comes back to the previous level. This is before I even consider a trade. There are a few reasons why I like to see this but the big one is orders. Why? These big levels will attract a lot more attention if there is time for them to stand out.
5) The other thing I want to watch are past price rejections. I like to watch highs and lows on the chart. This gives me a good indication of how strong the market is. For example, if price hits a level and gets rejected, comes back again a few days later and gets rejected again (this time unable to take out the lows from the first rejection), I will be less inclined to want to trade.
Get some practice and use this little list to find horizontal support and resistance levels. You will soon be trading very high probability areas where large institutional flows are sure to be watching.
At no time should anyone view the information presented anywhere on this website as advice, recommendation or proven. Everything reflected is merely opinion and may not be accurate. The purpose of the site is to express the opinions and views of Jarratt Davis. There is no intention to offer specific help, advice or suggestions to anyone reading any of the content posted here.
Editors’ Picks
EUR/USD holds firm near 1.1850 amid USD weakness
EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.
GBP/USD holds medium-term bullish bias above 1.3600
The GBP/USD pair trades on a softer note around 1.3605 during the early European session on Monday. Growing expectation of the Bank of England’s interest-rate cut weighs on the Pound Sterling against the Greenback.
USD/JPY falls further toward 156.00 as intervention risks dominate
The Japanese Yen is looking to build on its strong intraday move up amid speculations that authorities will step in to stem weakness in the domestic currency. In fact, Japan’s Finance Minister Satsuki Katayama stepped up intervention warnings and confirmed close coordination with the US against disorderly FX moves. This, along with some follow-through US Dollar selling, triggers an intraday USD/JPY turnaround from the 157.65 region, touched in reaction to Prime Minister Sanae Takaichi's landslide win in Sunday's election.
Editors’ Picks
EUR/USD holds firm near 1.1850 amid USD weakness
EUR/USD remains strongly bid around 1.1850 in European trading on Monday. The USD/JPY slide-led broad US Dollar weakness helps the pair build on Friday's recovery ahead of the Eurozone Sentix Investor Confidence data for February.
USD/JPY falls further toward 156.00 as intervention risks dominate
The Japanese Yen is looking to build on its strong intraday move up amid speculations that authorities will step in to stem weakness in the domestic currency. In fact, Japan’s Finance Minister Satsuki Katayama stepped up intervention warnings and confirmed close coordination with the US against disorderly FX moves. This, along with some follow-through US Dollar selling, triggers an intraday USD/JPY turnaround from the 157.65 region, touched in reaction to Prime Minister Sanae Takaichi's landslide win in Sunday's election.
Gold remains supported by China's buying and USD weakness as traders eye US data
Gold struggles to capitalize on its intraday move up and remains below the $5,100 mark heading into the European session amid mixed cues. Data released over the weekend showed that the People's Bank of China extended its buying spree for a 15th month in January. Moreover, dovish US Fed expectations and concerns about the central bank's independence drag the US Dollar lower for the second straight day, providing an additional boost to the non-yielding yellow metal.
Cardano steadies as whale selling caps recovery
Cardano (ADA) steadies at $0.27 at the time of writing on Monday after slipping more than 5% in the previous week. On-chain data indicate a bearish trend, with certain whales offloading ADA. However, the technical outlook suggests bearish momentum is weakening, raising the possibility of a short-term relief rebound if buying interest picks up.
Japanese PM Takaichi nabs unprecedented victory – US data eyed this week
I do not think I would be exaggerating to say that Japanese Prime Minister Sanae Takaichi’s snap general election gamble paid off over the weekend – and then some. This secured the Liberal Democratic Party (LDP) an unprecedented mandate just three months into her tenure.
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