subject: Charting at Support Resistance levels [print this page] Charting at Support Resistance levels Charting at Support Resistance levels
This same scenario applies to demand lines weather you trade stocks or the forex market. When you look at your chart levels, just look left and ask yourself "If traders wanted to buy at this level, have they already had an opportunity?" If so, there is a very good chance you are trying to look through a Wall.
The same principles work for selling at the origin of a downtrend. You can see many supply levels in the downtrend, however, the origin of a move will offer the best opportunity for shorting. In the chart below, you see I have selected two gaps for the origin of a move. The first gap started a move to the downside and was a gap and go. When price returned to this level, it offered an excellent opportunity for shorting the stock.
So traders would do well to be patient for their entries and look to the return to the origin of a move for the best entries. This is how you become a profitable trader.
The basic principle of buying low and selling high is how we derive profit when buying and selling stocks or trading the futures,forex markets. Traders can offer a lower price and typically end up somewhere in the middle. Smart investors look for deals where they can buy what they are looking for at a lower price than others pay. We all typically try or desire to buy at "wholesale" prices. Most of you are thinking that I am wasting your time because you know this already and that's true; everyone applies this smart buying and selling action in every part of your trading history.
However, during the years that we are conditioned to buy low and sell high, we are almost taught to take the opposite action with our investments either long term or in short term trading. When traders experience fear and take action in the markets, the overwhelming majority sell and this is almost always the opposite action you should take. large selling brings prices down to deep discount demand levels and when the last seller sells at price levels where more willing demand exceeds willing supply, price then rallies strong because you have no more sellers.
