Selecting a Forex timeframe for Support and Resistance

Selecting a Forex timeframe for Support and Resistance

 

 

Selecting a Forex timeframe for Support and Resistance

Yes it is true that Support and Resistance levels taken from the Weekly and Daily charts are of more importance than those on lower time-frames in general. One should also take those S & R levels into account when trading the lower time-frame – all good principles.

The problem when you have traded 1000 of manual trades you realize that those a general guidelines that sound great, so logical and feel good but are actually of very difficult to put into practical use in day to day trading if you have not made your own personal trading “rules”.

One only has to draw the daily or weekly support and resistance on those charts and then drill down to the hourly and 15 minute charts to see how highly inaccurate they are. So you must realize that when using those charts you are not using a precise price-level but rather a band of support and resistance. On the weekly and Daily these bands can be anything between 20 to 80 pips if not bigger. That is why your tops need be huge when trading daily or weekly charts. The only exceptions are things like the all-time or yearlong high or low levels which are a little more precise.

The other thing is when using support and resistance busy market S & R is literally being created in front of your eyes for continuation or reversal moves etc. then even the 5 minute charts play a major role.

So in general one should try not to be too restricted by rules (especially ones told to you) and be pragmatic and logical and practical. Also there are so many factors that go into making a trading decision to trick is to balance the odds in your favor as best you can.

So yes, if you can find a trade that seems to agree with higher time-frame information that is certainly a factor that could tilt the chances of success in your favor. But, in general, that should not be the only factor you take into account.

In the last month our team  has used Support and Resistance trades based on information from 5 min to daily charts so it is difficult to give a precise answer.

The type of transaction target you are comfortable with should also be a time-frame guide. We like transactions with targets of 80 to 150 pips so we like using the 4 hour and 1 hour charts for trading. We don’t actual refer to the Daily charts because of a trick we use. We condense the say 4 hour chart to look like a daily or weekly chart and then expand it back to the normal time-frame. More informative and you can draw your long term lines on the same chart.

 

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