Resistance and Support Line Corruption - Question

Discussion in 'Learn how to trade or invest by asking questions' started by YourFriend, Nov 21, 2016.

  1. YourFriend

    YourFriend New Member

    Hi,

    I would have a question regarding the resistance line's and support line's positions on graph when changing its time period. Note that I will automatically assume that your answer would be identical in any other situation as well as in situations of entering the long positions. My question will only be for entering short position but the logical is same for long and short positions. In order to ask my question, I have to attach three files:

    st-twoweek (first picture in my post, time period set to two weeks)
    st-oneweek (second picture in my post, time period of identical graph for identical trading symbol set to one week)
    st-daily (third picture in my post, time period of identical graph for identical trading symbol set to one day)

    Furthermore, to be more understandable I have to emphasize that all three files, all three resistance lines and all three support lines are set to identical prices. Obviously they are since its same graph, same lines, just different time period. The key point in ME understanding your answer and YOU understanding my question is the fact that support/resistance line always remain on same price regardless which time period I choose or switch to, as long as its same graph and as long as I am looking for historical results based on which I decide when to enter position.

    Resistance line: 1.1458 price
    Support line: 1.0591 price

    I usually make resistance/support lines based on which I decide when (if ever) to enter the trade on TWO WEEKS (10 business trading days - calendar matching the physical location of a broker). I believe my knowledge is OK enough that I can be trust myself and my skills that on attached file ''st-twoweek'' are both resistance and support lines created on good, correctly chosen, locations.

    Finally my question: They are actually two:

    1. As you can see on two weeks chart both lines remain on the same position. Resistance line at the top part (i never include shadows - its just my strategy) of highest candlestick and support line at the bottom of the lowest candlestick. Now please kindly look at one week chart I am attaching here. Both lines obviously still on the same prices, resistance line still at the top of highest candlestick, support line still at the bottom of lowest candlestick. Actually this time (this is NOT a rule or my strategy, it is only this particular time) I am looking at only current downtrend and previous uptrend. If you look only at that two trades, you will see that support line is still at the bottom of lowest candlestick. Very good. Now please see the daily chart. Please look at it. Here is where the problem occurs. Obviously both lines remain on the same prices but the problem is that resistance line is NOT anymore on the top of the highest candlestick. Sometimes in such situations when moving timing periods both resistance and support lines might not be on correct positions anymore, sometimes just support line. In this particular example the problem occurred with resistance line only. Question that I have is: Do I leave it as it is (still same price) or do I have to move the resistance line to the position where the top of highest candlestick is (obviously that will change a bit the resistance line price)? The modifications of timing periods caused the problem that resistance line, in this example, is not where it must be and I am asking if I have to move it and respect the new resistance line's position as potential entering point (a cent or more above) into long position? Note: I will use same logic of your answer for support lines. (both long, short trades).

    2. I previously said that I am used to do the resistance and support lines, used to define when to enter the trade, if ever, on two weeks chart. Is this OK? Or would you suggest me to do them on any other time period?

    Thank you very much in advance.

    st-twoweek.jpg

    st-oneweek.jpg

    st-daily.jpg
     
  2. YourFriend

    YourFriend New Member

    could anyone please answer on that? took me a lot of time and effort to accurately create this post and construct both (2) questions will belonging pictures. So hopefully someone could assist, would be appreciated.
     
Loading...

Share This Page