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Help with support and resistance

 
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codypeart

Help with support and resistance

I am new to trading and I have a question about reading support and resistance on the charts.

I understand support and resistance but I do not understand how to read the candles relating to support and resistance.

My question is this:

 

Do you use the candles hi and low when determining support and resistance or just the body of the candle when and where it closes at?

 

Thanks for any help or clarification!

 

 

Wed, 02/24/2016 - 6:28pm
 
nick.spicer

Great question - some traders use the body, and some use the wicks. TO be honest it depends on what you prefer during your experience. Use candle bodies for now if you want and over time you will see how the wicks play into your trading.

Remember that wicks indicate where price has gone, so this can be useful in placing your stop and targets. Perhaps leave stops away from wicks, and targets within them? Might be a good starting point.

Support and resistance - I had a little bit of difficulty understanding this. Remember that typically the market returns to previous support and resistance lines. I typically use them as targets - hence why I say start drawing them using the candle bodies.

Hope this helps!

 
amclaughlin01

You can also compare the candle to previous highs/lows. This may give you and indication if it's the wick or the body that is the support or resistance. Personally, I believe that it's the absolute top or bottom of wick or body. It's at this extreme where resistance or support are kicking in and doing their thing. Each tells it's own story on what is happening at the close.

If there is a wick, then it means that it hit the support or resistance and they are pushing back. If the candle closes with no wick or all body, then it could be an indication that it hasn't quite finished making it's move and will continue in the same direction on the next candle.

Best thing I would do is look back and see if there is another candle or set of candles that are at that same level. This will confirm whether you are in fact hitting a support or resistance level.

 
marionbusch98_1

Support/Resistance can be better defined by looking back some reasonable distance in the past (depending on your time-frame). If you don't find them in your current TF, you may need to move up a time frame to find reliably defined S/R.

You want a well defined S/R line that has multiple touches on that zone. If you think about zones for S/R you will be better served. S/R is not the exact pip/tick but and area that appears as a barrier to price-action.

You may also find a EMA, SMA or another indicator line is acting as the barrier to price -action.

When you draw lines to define ranges for break-outs those are S/R lines.

Diagonal lines drawn for channels, flags, pennants & wedges are by definition S/R zones. All of these lines require multiple touches to draw S/R lines.

 
codypeart

Thanks all....that helps.