Practical Exercise 4

[Ronald Williams]

Hi All,

 

I attach charts showing untested support and resistance on the daily chart for GBPUSD and untested resistance on the 15 minute chart for AUDUSD.  In all three cases the extreme bar is a small one and my lines have therefore been drawn at the highest point of the body of the bar for support and at the lowest point of the body for resistance.  Any comments welcome.

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[Rich Fitton]

Hi Ronald, all looking good 🙂

[Gillian Naismith]

Hello all (or very few!)

I kind of know what I’m doing here – my problem is fine-tuning whether to put the line at the top of the candlestick/bottom of the candlestick (where it highlights the change of direction) or through the middle of the fore and aft bigger candlestick – I hope you may know what I mean.  I attach charts with S&R in three of them and a 15 min resistance one.  Be glad to hear what you think so I can get it easier in my mind – thank you.

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[Rich Fitton]

Hi Gillian,

Here’s are the basic rules that’ll help you find high volume areas that can become support or resistance…

Take a look at the candlestick formation that marks the high/low of a move:

– When a long bar creates the extreme high or low find the midpoint of an adjacent shorter candlestick body

– When a solo short bar creates the extreme high or low find the top/bottom of the body of that candlestick

It’s not an exact science so if you’re ever in doubt it’s safer to use a level that stands closer the the current market as your target.

I’ve added some notes to your screenshots, hope it helps 🙂

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[Gillian Naismith]

Thanks Rich – now that last diagram above (gillian-sr1), I see you start your green line on the top of the small blue candlestick whereas I started it on the bottom of it – that’s the kind of thing I find difficult, I can identify the candlestick pretty much but it’s just whether to start the line on top or bottom of the tiny candlestick.  I think I’m ok with aligning ‘through the middle’ of adjacent larger candlesticks.  It seems also that you opt for putting your line at the bottom of small red candlesticks: so would it be that if it is a small blue candlestick, start the line at the top and if it is a small red candlestick of change, then start your line at the bottom of it.  Hope you see what I mean.

[Rich Fitton]

Hi Gillian,

It just depends whether we’re looking at the bar as potential support or potential resistance so don’t worry about the colour of the candles. The same criteria is used whether they are red or blue…

If the small bar is above the current market (i.e. potential resistance) you’d use the bottom of the candlestick body to project your line from.

And if the small bar is below the current market (i.e. potential support) you’d use the top of the candlestick real body.

Try to imagine that you always want the market to reach your line before the small real-body is penetrated and it should help you put your lines in the right place. Hope it helps 🙂

[Timothy Hall]

Hi guys,

Insane hours at work mean I’m slow on this course, but I’ve finally reached practical exercise 4, so I’ll attach here a chart where I think I’ve highlighted areas of support and resistance. This is the first time I’ve posted something on here, so I hope I’ve done it right! Any thoughts and feedback would be much appreciated. Thanks!

Tim

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[Rich Fitton]

Hi Tim,

S&R all looking good 🙂

[Gillian Naismith]

Hello Tim

Just to say well done, Rich has given you full seal of approval with just one chart (compared to my drama-rama which precedes you though of my own making!)  Do not worry about that feeling of ‘lagging behind’ as I have embarked on Module 5 only recently due to a bit of limited pc use also so you’ve cheered me up, I didn’t think there could possibly be anyone else but me back here – Gillian.

[Timothy Hall]

Thanks both!

[Gustaf Eriksson]

Hi all, having a free Sunday afternoon means I’ve been able to work through some lessons, hooray!
Attached find three charts:

EUR-GBP 15 mins shows an untested resistance with a “double bounce”!

AUD/USD daily has both resistance and support on same chart, and there’s an
“almost” touch of resistance 3 weeks later.

EUR/GBP: I’ve drawn a support line on 17 July 2015. I know there’s a wick penetrating that line early August,
but the way I interpret support/resistance there’s a bit of leeway?

Comments?

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[Rich Fitton]

Hi Gustaf,

Thanks for posting your examples 🙂

EURGBP-15m: Yes! That’s a nice little cluster of price action you’ve spotted there.

AUDUSD: The support you’ve found is a good level, It’s already had a couple of probes from above (very close although it wasn’t pinged to the actual pip) so it may already have been weakened somewhat. I’ve also sketched in a couple of lower resistance levels for you to have a look at (the one you found is totally correct too).

EURGBP: Great example of support being found and respected – see how the market bounced right off your level around 12 days after the lows had printed? Nice! I’d be vary of using the same level again for support if looking for reversal trades, still a sensible place to use as a sell-trade target.

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