This is how I draw SR lines. I start with monthly and try to determine
obvious SR lines. To do that, max. zoom out your chart and always switch
between candle and line charts to see if high/low prices have any
meanings relative to closes, if highs/lows are fakes or they are just
price shootings/anomalies.
Then go down to weekly tf and do the same thing. SR lines that are not too obvious on monthly are clearer on weekly, therefore, normally my SR line drawing procedure is complete at this stage and I go down to daily tf to fine tune the ones drawn on weekly and monthly. Don't forget to switch between candle and line charts on weekly, too.
Re. daily charts, I either use them to fine tune SR lines drawn on monthly and weekly or if the price is in uncharted territory, I try to determine new SR lines.
You don't need to use open prices to draw SR lines because FX market is not like equities or commodities, since it is a 24hr market, open prices are normally just a few pips away from close prices except Sunday openings. For Sunday case, you can use Friday's close instead of Sunday opening, that's fine.
If you draw your SR lines correctly, then you don't need to amend your lines everyday or every week. They are valid for a long long time. Do you know that 0.7300 level on AUDUSD is coming from 1994? Only if you are in uncharted territory, then you can amend your recent lines depending on how the chart shapes up.
One last hint is that you should see these SR lines as a thick line, not a pinpoint and then watch PA around those lines. Because sometimes PA does not give us enough clue around SR lines or move through those levels without stopping due to news or strong momentum in which case we pass the trade. This is where patience and discipline play a vital role in trading, because if price gets away from recent SR line due to lack of PA, then you need to wait the price reach the next SR line.
Now, if you open your EURGBP chart and do the things I have tried to explaine above (because I believe EURGBP is the most clean chart to practice SR lines), and then switch to other pairs and do the same practice, I believe you'll have more confidence in drawing SR lines correctly.
Then go down to weekly tf and do the same thing. SR lines that are not too obvious on monthly are clearer on weekly, therefore, normally my SR line drawing procedure is complete at this stage and I go down to daily tf to fine tune the ones drawn on weekly and monthly. Don't forget to switch between candle and line charts on weekly, too.
Re. daily charts, I either use them to fine tune SR lines drawn on monthly and weekly or if the price is in uncharted territory, I try to determine new SR lines.
You don't need to use open prices to draw SR lines because FX market is not like equities or commodities, since it is a 24hr market, open prices are normally just a few pips away from close prices except Sunday openings. For Sunday case, you can use Friday's close instead of Sunday opening, that's fine.
If you draw your SR lines correctly, then you don't need to amend your lines everyday or every week. They are valid for a long long time. Do you know that 0.7300 level on AUDUSD is coming from 1994? Only if you are in uncharted territory, then you can amend your recent lines depending on how the chart shapes up.
One last hint is that you should see these SR lines as a thick line, not a pinpoint and then watch PA around those lines. Because sometimes PA does not give us enough clue around SR lines or move through those levels without stopping due to news or strong momentum in which case we pass the trade. This is where patience and discipline play a vital role in trading, because if price gets away from recent SR line due to lack of PA, then you need to wait the price reach the next SR line.
Now, if you open your EURGBP chart and do the things I have tried to explaine above (because I believe EURGBP is the most clean chart to practice SR lines), and then switch to other pairs and do the same practice, I believe you'll have more confidence in drawing SR lines correctly.
No comments:
Post a Comment