In probability theory and statistics, a
median is described as the number
separating the higher half of a sample,
a population, or a probability distribution,
from the lower half. The median of a
finite list of numbers can be found by
arranging all the observations from
lowest value to highest value and picking the
middle one. If there is an even number
of observations, the median is not unique,
so one often takes the mean of the two
middle values.
For this trade we will use the
candlestick plots. The candle is able to show an
opening, closing, high and low of a
currency for a given time frame.
In a Bull market Support levels form as
the market goes up.
For the Bears to take control of the
market levels of support will have to be
broken.
The Bears will always target levels of
support.
Support
Support forms at significant lows. Not
all lows are levels of support though.
2 types of support:
Current level of Support
Past levels of Support
How do we find levels of current
support??
Remember that Support forms at
significant levels of lows
To qualify as a significant low you
need 5 candles:
A low with 2 candles to its left and 2
candles to its right that is higher or
equal to the lowest point of the low
candle.
Significant Low:
Remember that support forms at
significant lows. But not all lows are levels of
Support and the only two types are
current levels of support and Past levels of Support
Also remember that support is
significant lows that have not yet been broken and
to find support you go to the current
market price and step down to significant
lows. Keep in mind that you may NEVER
step up to find Support levels.
For the Bears to score a point they
must break a level of support. Most of the
time after scoring a point, the market
will pull back (bear take a break) and when
Support levels are close to each other
the bears will probably take out both at the same time.
Resistance
In a Bear market Resistance levels form
as the market goes Down and for the
Bulls to take control of the market,
levels of Resistance will have to be broken.
The Bull will therefore always target
levels of Resistance
Resistance
In a Bear market Resistance levels form
as the market goes Down and for the
Bulls to take control of the market,
levels of Resistance will have to be broken.
The Bull will therefore always target
levels of Resistance
Remember that Resistance forms at
significant highs. But not all highs are levels
of Resistance and the only two types
are current levels of resistance and Past
levels of resistance
Also remember that Resistance is
significant highs that have not yet been broken
and to find resistance you go to the
current market price and step up to
significant highs. Keep in mind that
you may NEVER step down to find
Resistance levels.
Summary:
Bulls want the market to go up. Support
forms as market goes up.
Bears want market to go down.
Resistance forms as the market goes down.
Question is how do we now use these
support and Resistance in trading?
Firstly this helps point out who
exactly are in control of the market at any given
time, i.e. Bulls or Bears.
If Support levels are forming and
resistance are being broken then Bulls are in
control of the market.
If Resistance levels are forming and
Support is being broken then Bears are in
control of the market
If Bulls are in control we want to buy.
If Bears are in control we want to
sell.
The Bear Trend:
We know that bears target support and
form resistance as they take the market
down.
Question: Where is a good place to put
your limit & Stop?
After the support is broken wait for
pullback then sell
Remember:
We know that bears target Support
levels.
We know that levels of resistance
form as the market goes down.
We know that for the bulls to take
control they will have to break
resistance…….
The trade:
Enter at Pullback. (Sell)
Limit 15pips before support (Buy)
Stop 15pips above resistance (Buy)
The Bull Trend:
We know that Bulls target resistance
levels and form support as they take the
market up.
Question: Where is a good place to put
your limit & Stop?
After the resistance is broken wait for
pullback then Buy
Remember:
We know that bears target
Resistance levels.
We know that levels of support
form as the market goes down.
We know that for the bears to take
control they will have to break
support…….
The trade:
Enter at Pullback. (Buy)
Limit 10pips below resistance (Sell)
Stop 10pips below support (Buy)
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