Support and Resistance: S&R in the Market

Support and Resistance: S&R in the Market

When you start talking about Support and Resistance, then you need to begin with the highest time frame you are looking at to make decisions from that chart on correct trading levels.

On the chart above, this is the Daily Crude Oil Candlestick Chart with all of the data that is important as a trader.

Points of Interest on the Daily Chart:

  • 50 Bar SMA
  • 200 Bar SMA
  • Pivot Points: PP, R1, R2, S1 and S2
  • Major Support and Resistance Levels
  • Minor Support and Resistance Levels

All of this information is extremely helpful to traders, but what exactly should you be looking at on a daily basis.

We can determine the daily trend of the Crude Oil Market … Down … because the 50 Bar SMA (Gold line) is below the 200 Bar SMA (Purple line). Therefore; until proven otherwise, the crude oil market will make a better short (sell) opportunity than a long (buy) opportunity.

It is important to note, we are in a Price Action Pattern of what is commonly referred to as a Trading Range or a Congestion on the Daily Crude Oil Chart. We are able to subdivide the Support and Resistance areas into our daily target trading levels.

The most significant point on any Daily Trading Chart will be the Pivot Point. Notice, on the Crude Oil Trading Chart above, this is located at 4558. This number will normally change on a day by day basis. This is the most significant point of value where traders are more apt to be short below the Pivot Point line, and long above the Pivot Point line.

Also looking at the Daily Crude Oil Chart, we are much closer to the Major Support level, than to the Major Resistance level. To get these Price levels you look for the Highest Point for Resistance on your chart data, normally going back a couple of months worth of data from the charts. Likewise; we are looking for the Lowest Point for Support.

On the Daily Crude Oil Chart Shown Above These Levels are Currently:

  • Major Support: 3850
  • Major Resistance: 6400
  • Minor Support: S1 Line 4407 and S2 Line 4311
  • Minor Resistance: R1 Line 4654 and R2 Line 4805

Additionally, what is seen on the Daily Crude Oil Candlestick Chart is our 50 Bar SMA and our 200 Bar SMA levels are above Price Action. Once again, this confirms that traders would much rather be a seller, than a buyer given the current Price Action Waves of the Crude Oil Market.

In summary, the best chart to start formulating Support and Resistance Levels is the Daily Crude Oil Price Action Chart, then working your way on down to the chart that is  utilized for your trading decisions. By accomplishing this task, you will have a top-down approach to your trading decisions and you will take advantage of the best possible trading opportunities as they develop.

Would you like to read my Manuscript on Trading?

 

Good Trading and God Bless,

David M. Knight
TradeCraze

P.S. Previous Training: How to Determine the Trend and Waves in the Market

 

 

About The Author

David M. Knight

I am a 30 Year Futures and Commodities Trading Veteran. In addition, I enjoy games of skill and chance like: poker, craps, blackjack and roulette. During my professional career, I have developed and implemented successful trading strategies and methods; along with winning systems in games of skill and chance. Join with me on our mutual journey together.

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