Please Understand the concept of Resistance.
The Resistance here is Resistance to Price
The resistance is anything that puts a stop to the price.
A small 5 minute down bar in a heavy daily up bar signifies resistance,but that is just way too small a resistance.
When Price hits an unknown obstacle with considerable force and force is repelled with a significant reactionary force,i will consider that as a resistance.
Imagine a mosquito hitting the windshield of your car,it is a small resistance.
Imagine a brick hitting your windshield that is more.
Imagine a comet hitting your windshield.Then your dead in the water sleeping with the fishes
My point is for me to close my buy in an up market price must convince me that it wants to go down,and for my to buy at a better price in a bull market i want a better price (which again is a down move).
You may be blessed with gods grace and know that point,with all due respect and no offence then good for you,but i don;t believe such a point can be calculated before that point is proven to exist.
So if you know eur/usd will drop at 1.300 or at some other price then your god,and must be a billionaire
But if you are none of the above you must wait for the invisible white place in your charts to show a significant resistance.
Now significant resistance in terms of charts will only show as price dropping full scale against a bull day to the last impulse base in that bull ride.
Why the thing in red is obvious for the guys with big pockets to be really be profit taking and getting their orders out of the market as a result,would leave the market with a vaccum and a vaccum is filled with more orders which can only be found at the last place the orders were(the last impulse base).
So a 5 minute drop and a significant 5 minute rise on the chart back to the same place the drop happened is significant resistance for 5minute
And same for 1 hourly and 4 hourly
As is the property of price it will only drop down in a bull market,and go up in a bear market if the real dudes causing price move are either not interested in buying anymore.
Or are taking profit.
Or they want to sell in case of a bull market and buy in case of a bear market.
Now the real dude is just a black box term i am using to define the real money behind the price moves.
In all essence when i mention the real dude wants to act it shows on the chart,
In a bull market last impulse base where prices took off are reached
In a bear market last impulse base where prices fell down is reached
AB=BC
It will appear on chart as a hugging candle.
Two or more candles with same highs or closes.
But you must know which trend you are reversing for knowing how to track the orders.
in a 1 hourly up trend,i will zoom in to 5 minute to find last base.
On a daily i will zoom in on 2 hour or 3 hour for last base.
I will make a bold statement the point B when price encounters a significant resistance cannot be predicted.
But the time when B can form be surely be one of the liquid and volatile sessions when the real dudes trade.
And it can be deciphered by looking at the movement in price happening then.
hence a 15 minute strong bull bar in a frankfurt open or london open cannot be ignored.
Frankfurt alone can't do ****,it's worthless.
Combine with it london.
And tokyo they all can;t just be wrong can they.
So getting back to significant resistance.
Significant resistance shows,on the chart,one must let it form,wait for it to tip its hand,
Just for the love of god ,wait for that 5 minute bar to drop for atleast 1 hour or so(if you want to long at a better price).
For love of god wait for that 5 minute bar to drop for 1 hour or so for it to show it want to destroy your profit.(when you are already long way below.)
I want you guys to follow the trader lingo,that you will not close your buy/sell order which is in good profit without giving price enough time to show otherwise.
In trader world there is always.
If this then-----------------------> that
Never What if.
The above in red is key,to all those fools saying what if the price drops from here,man it looks way overbought,ohhh god my line just got touched,price is not overbought until it shows
In trader world there should be a long indefinitely until proven otherwise.
Now if your system has solid statistical backing and 80-85 percent probability proven over a big sample space,then i will throw the line i used for you ,away in garbage (that line i believe you use most in your life
what if)because if you know for certain statistically that price will drop from your line then in my book it qualifies for a
if this then that
But if you followed your
if this then that and it failed most of the time it is not
if this then that then it is a
what if
If you have an excuse when your line didn't work ,in my book you are just avoiding the reality.
Until that day when you become an angel,you must wait for real dudes to show what they wanna do.
When they do,it shows.
100 percent time a resistance to price will show on your chart as last impulse base target,when AB=BC
And 100 percent time A will give obstacle
and if it didn't it means real dudes have decided to do something else other then the last move.
But if a bar or candle(which is a wave) stays stuck in their hugging tops then it still remains indecision
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Please read this illustration given below.
Looking at the 4 hourly Profile of Euro we see that there is a gap down.
Now essentially we can consider a gap down as a bear day.
Now from 4 hourly perspective,the next day which is monday today could have either been a full bull bar
or a bear bar.
or an indecisive bar with a a wick down below.
or an indecisive bar with wick upstairs.
Let us talk about the perspective down move(the gap)
Now such a down move a bear day cannot turn on a dime,We will need to follow a defined set of actions to cancel out the move or continue it,I am going to underline then here.
For now we are going to assume the bigger Time frame which is daily or weekly has no impact on the price move,we will discount them or include them accordingly.
The first signs a bear day can stop for the moment comes when price goes sideways,remember when we give price time to show its hand(in this case we give price time because we are just not in the market,we want to enter the market for a sell at a higher price or we want to enter the market with a buy at current price.
For sell we need a move up above,so we can sell
For buying we need confirmation that the price indeed wants to go up from here,we don't want to trip our stop loss for a stupid reason if this area doesn't show what we want to see.
Moreover just when the gap happened there is just no volatility we can expect,remember that european markets add volatility and reason.
See attached chart.
in the upper right is 30 minute view,chart is 4 hourly
