Technical tools can be very subjective but here are some general guidelines on how to use them for intraday trading
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I think when we look at something like trend lines and support and resistance, there's obviously a lot of subjective elements to it, right? There are some caveat with some traders who like to use only the wicks and others will use only the bodies and some will use candlestick charts, and others will only use line charts.
There's so many different ways of looking at it. It's definitely not a one size fit all when we look at these types of things. And the only thing that has really helped me with these types of tools when it comes to trend lines and support and resistance zones is two things.
Firstly, is to know that there's zones. It's usually a zone or an area and not a strict line. And secondly, is knowing that at the end of the day, that all of them are trying to show you the exact same thing, which is just possible areas where the market might find support and resistance.
So whether it's horizontal zone with supporting and resistance, or whether it's a diagonal zone with trend line support and resistance, you're just trying to establish viable or higher probability places on the chart where price might find support and resistance. And if the level is significant enough, a key break of some of these levels can, of course, create some forceful moves in the market if there was plenty of stops sitting behind those levels, as those levels have tripped.
Now, in terms of how far you need to go back with them, just look at the most recent price action where you are now. So for example, right here on the S&P 500, we can always go to the weekly, and on the weekly you start frantically marking out key levels on the charts on the weekly and then doing it for the daily and then the H4 and all the way up to M30 or M15.
But then you're gonna be stuck with a chart that's gonna look like a Christmas tree, right? Major levels all the way around. It's gonna be very confusing to just watch the overall price action.
So what I prefer to do, especially when you go to the higher timeframes like the weekly or the daily, definitely do it, but only mark out those key areas that are major levels on that higher timeframe, but close to your price action.
So if we go into the daily, mark out the high we are currently trading at, or the highest point we currently reach most recently, and these lows. Anything below or above that is probably gonna be outside the reach of the market today. Now that doesn't mean that it can't happen.
But again, at that time while we are trading here, the most significant support probably was that low going back to the break of that 3000 levels. Only have those most, most recent price action levels marked out on the higher timeframe. And then what you can basically do is just drop down. Just drop down throughout the charts and see if you can spot any intraday level.
So of course we had that one marked out on the daily then looking a little bit more granular, we can see that level is also significant. And just above that, the second level coming in at 3193 and 3200. So that overall zone here is gonna be a very important area for the S&P, for example, to the downside. And then you can obviously do the same thing for trend lines.
If you didn't spot one on the daily, spot on the H4, we can see we have a little trend line extending up and that's evidently where we test today as well. And now what you can do is you can always drop down into lower timeframes and see if you can maybe make those levels a little bit more accurate.
Now we can go back to where we are currently and we can see evidently that where we found some support, bounced up, found support again, and now are currently supported on that level. Just think of it in terms of where you think the market would find, most likely, support and resistance areas, whether that is horizontal, whether it's diagonal, And in terms of how far you need to go back, just look at the most recent price action. Looking at the Euro-Dollar, we've been trading this for a while to the upside now and what you'll notice, if I go out to something like, let's go to the H4.
The thing we need to mark out now and focus on is the levels to the upside and then these most recent levels.
You find those key areas close to where we trading right now, and then as you go through the timelines, or timeframes rather, just mark out those key levels that's gonna be most important for your most recent price action.
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