Take a look at the picture
I know that a lot of newbies have problems with the recognition of the real break. At this picture we could see how powerful resistance level was broken.
My comments.
At 3:30 (M5 GMT) the price tried to break this level for the first time, but it didn't manage to do so though. After a little time we could see the first break up to 2.0536. Remember, we mustn't open the trade at once, when level was broken for the first time! As you can see, the price had rolled back and only after it returned, the price has managed to fix under this resistance level, AND then resistance has become a support! Please, remember this thing, because it is the main point here. Price had bounced from this new support level, and we could open a trade.
Just a few words on the current situation...
There was an impulse ascending wave, and now we will have a correction. After that I expect a new ascending movement. Soon I will post there more detailed information with explanation on the charts.
P.S. While I was writing this post, the correction had begun. Probably it will end around 2.0525. I will analyze it soon.
Friday, October 26, 2007
GBPUSD How to recognize the real break
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3 comments:
How do we know when a price has been fixed.
One more comment please...
How were the support and resistance levels locations on the chart determined, and why?
Hello Spiritsoul!
I'm glad to see a new visitor on my blog.
The answer to your first question is on the post.
I marked out this phrase: resistance must become a support (or vice versa on the descending trend). As you can see on the chart, after 2nd brake, there was a small rollback and price didn't manage to get back under the level. The price have bounced from this level and then it fixed above. We could open a trade on the level, marked out with a green line, only after that. I was asked with this question before, so I will post new theme with further discussion on the charts soon.
The second question.
After each american session, when the main trend is finished, I start to analyze current situation. The main instrument to define support/resistance levels for the next session is Fibo grid. I try to define Elliot waves on the chart, and then I place Fibo on one of these (usually on the 1st impulse wave, on the correction and so on - it all depends on the current situation). On each morning I place Dow Jones levels on my charts. The fact is that usually my levels are very close to DJ's, but I define them 12 hours earlier. On this picture you can see DJ lines on the left side of the vertical red line. As you can see, there is a little difference.
Sometimes I have some kind of a gap between my and DJ's levels. Then I will place my trades on the basis of both.
Please, leave your comment, if I answered your questions. And mention another points that you want me to cast light on.
I think, that I will open new theme this weekend.
I look forward to see you on my blog.
Best regards!
Anthony Schneider.
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