Thread by @in_tradingview

1/14 𝗦𝘂𝗽𝗽𝗼𝗿𝘁 𝗮𝗻𝗱 𝗿𝗲𝘀𝗶𝘀𝘁𝗮𝗻𝗰𝗲 levels are a critical part of trend analysis because they are used to make specific trading decisions. The fact that these levels flip roles between support and resistance can be used to determine the range of a market,

2/14 trade reversals, bounces, or breakouts. These levels exist due to the influx of buyers and sellers at key junctures. S/R levels can be drawn using a variety of technical indicators such as Moving averages, horizontal levels, trendlines, etc.

3/14 (which are 𝗳𝗿𝗲𝗲𝗹𝘆 𝗮𝘃𝗮𝗶𝗹𝗮𝗯𝗹𝗲 𝗼𝗻 𝗧𝗿𝗮𝗱𝗶𝗻𝗴𝗩𝗶𝗲𝘄)

This post will shed some light on these questions:
1. What is a 𝘀𝘂𝗽𝗽𝗼𝗿𝘁 level?
2. What is a 𝗿𝗲𝘀𝗶𝘀𝘁𝗮𝗻𝗰𝗲 level?
3. What is their importance?
4. When & where to place orders?

4/14 𝘗𝘭𝘦𝘢𝘴𝘦 𝘳𝘦𝘮𝘦𝘮𝘣𝘦𝘳 𝘵𝘩𝘪𝘴 𝘪𝘴 𝘢𝘯 𝘦𝘥𝘶𝘤𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘱𝘰𝘴𝘵 𝘵𝘰 𝘩𝘦𝘭𝘱 𝘢𝘭𝘭 𝘰𝘧 𝘰𝘶𝘳 𝘮𝘦𝘮𝘣𝘦𝘳𝘴 𝘣𝘦𝘵𝘵𝘦𝘳 𝘶𝘯𝘥𝘦𝘳𝘴𝘵𝘢𝘯𝘥 𝘷𝘢𝘳𝘪𝘰𝘶𝘴 𝘤𝘰𝘯𝘤𝘦𝘱𝘵𝘴 𝘶𝘴𝘦𝘥 𝘪𝘯 𝘵𝘳𝘢𝘥𝘪𝘯𝘨 𝘰𝘳 𝘪𝘯𝘷𝘦𝘴𝘵𝘪𝘯𝘨.

5/14 𝗦𝘂𝗽𝗽𝗼𝗿𝘁:
Support is a zone where the price tends to find a cushion as it falls. In general, the price is more likely to “rebound” from this level rather than pierce through it. However, once the price breaks down from this level, it is likely to continue...

6/14 falling until meeting another support.

(See the exhibits for a better visualization.)

7/15 𝗥𝗲𝘀𝗶𝘀𝘁𝗮𝗻𝗰𝗲:
It is a zone where the price tends to find resistance as it rises. In general, the price is more likely to “bounce back down” from this level.

8/15 However, once the price pushes above this level it is likely to continue rising until it meets another resistance.

(See the exhibits for better visualization.)

9/15 𝗥𝗼𝗹𝗲 𝗿𝗲𝘃𝗲𝗿𝘀𝗮𝗹/𝗖𝗵𝗮𝗻𝗴𝗲 𝗼𝗳 𝗽𝗼𝗹𝗮𝗿𝗶𝘁𝘆:

A resistance level after a successful breakout turns into support and a support level after a breakdown turns into resistance. This is known as "Change of Polarity" and the zone is called a "Flip zone".

10/15 𝗦𝗮𝗺𝗽𝗹𝗲 𝘁𝗿𝗮𝗱𝗲 𝘀𝗲𝘁𝘂𝗽𝘀:

𝟭. 𝗕𝘂𝘆𝗶𝗻𝗴 𝘁𝗵𝗲 𝘀𝘂𝗽𝗽𝗼𝗿𝘁

If after being rejected several times by the resistance, the price finally manages to break out. The right course of action can be to wait for a successful retest of this level,

11/15 before going long. 𝘛𝘩𝘪𝘴 𝘪𝘴 𝘥𝘰𝘯𝘦 𝘪𝘯 𝘰𝘳𝘥𝘦𝘳 𝘵𝘰 𝘢𝘷𝘰𝘪𝘥 𝘧𝘢𝘬𝘦 𝘣𝘳𝘦𝘢𝘬𝘰𝘶𝘵𝘴/𝘣𝘶𝘭𝘭 𝘵𝘳𝘢𝘱𝘴.

12/15 𝟮. 𝗦𝗲𝗹𝗹𝗶𝗻𝗴 𝘁𝗵𝗲 𝗿𝗲𝘀𝗶𝘀𝘁𝗮𝗻𝗰𝗲

If after being rejected several times by the support, the price finally manages to break down. The right course of action can be to wait for a successful retest of this level, before going short.

13/15 𝘛𝘩𝘪𝘴 𝘪𝘴 𝘥𝘰𝘯𝘦 𝘪𝘯 𝘰𝘳𝘥𝘦𝘳 𝘵𝘰 𝘢𝘷𝘰𝘪𝘥 𝘣𝘦𝘢𝘳 𝘵𝘳𝘢𝘱𝘴.

14/15 𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻:

A zone keeps on flipping roles b/w S/R. It serves as a support at times and a resistance at others. As a result, these zones should be regarded as possible S/R zones, as there is no guarantee that they will operate as desired zones.

15/15 𝗣𝗿𝗼 𝗧𝗶𝗽:

Since there is an influx of buyers and sellers at the S/R level, hence there is a lot of liquidity around these points. Hence, it is not wise to place orders close to these levels. Always keep a buffer.

𝗥𝗲𝗮𝗱 𝘁𝗵𝗲 𝗰𝗼𝗺𝗽𝗹𝗲𝘁𝗲 𝘁𝗵𝗿𝗲𝗮𝗱 𝗵𝗲𝗿𝗲:

in.tradingview.com/chart/CRUDEOIL…

#tradingview #trading