Part-time Trading - Part 3.2

Hello,

Yesterday we discussed about how to draw support / resistance, trend-line, range boundaries & Fibonacci retracements. Few of you who checked the post through email, didn't get the chance to go through the video regarding Fibonacci retracements. Please click here to check the same.

In the mean time, let us have a look at an example of support lines and trend-line in real time charts.

In the above picture you can see GBP/USD daily chart, on a up-trend. The diagonal line I have drawn in blue is the trend line. The green horizontal lines are the support lines. The red horizontal lines are resistance lines. You can also see that I have marked some circles. The blue circles (you will not draw them on your actual chart, it is only for information purpose) shows exactly where the trend line have been marked. The red circle shows the previous swing low where the trend line was marked before. I know I have drawn lot of lines there, they are only for Information purpose. In the real trading, I will not draw so many lines because as I said earlier I don't like my charts look ugly and confusing.

We will see one example of Fibonacci retracements:

In the above picture you can see AUD/USD monthly chart. You can also see that the price was in a good up-trend and it went down to 38% Fibonacci and bounced back upwards.

 

The above picture, you can see the same pair on the same time frame. But here we have to wait for the price to move downwards between 38% to 61% to bounce back so that we can have a valid trade.

Let us look one example of Range Boundaries:

In the above picture you can see USD/CAD on daily time frame. It was a beautiful Range boundary formation there.

I hope you will do your own exercise to understand how to draw these important lines.

That's all for now.
Have a nice day.

Part-time Trading - Part 3

Hello

Yesterday we learnt the the important factor for successful part-time trading is long term support / resistance and price action around that that support and resistance.

Today we are going to learn how to draw those key levels of support / resistance in the long term charts (daily, weekly & monthly time frames)

The trades we are going to look for are, bounce trades, continuation trades or breakout trades.

Support / Resistance (S/R): when you look into the charts, you will see many swings (zig- zag patterns), but you are not going to draw lines for all those highs and lows of the charts but only to the significant highs and lows. Please note not to make the mistake of drawing too many lines as the chart looks ugly (*_*).

If you have two swing points to join together to draw a line then it is a stronger support / resistance (also known as double tops or double bottoms).

Trend-lines: You can only draw trend line (diagonal line) only if you get two swing points in the direction of the trend. If the trend line is below the price then it is up-trend line and if the trend line is above the price then it is the down-trend line. But always keep in mind the trend lines should begin from the very beginning of the new trend. Also you can draw only outer trend lines of a trend.

In both the cases (trend line or simple horizontal S/R line) wait for the price to move towards the lines and based on the price pattern (You will know about it in future posts) you are going to place your trades (entries).

Range Boundaries: Now let us talk about the Range Boundaries. Range Boundaries or Ranges are the price conjunction between the two boundaries or support or resistance. These Ranges can take horizontal levels of support or resistance or triangular shape (One S/R and the other trend-line). But the good quality ranges are horizontal ranges.

Fibonacci Retracements: One more type of drawing the lines are Fibonacci Retracements. There are plenty of videos who show you how to draw Fibonacci Retracements on your charts. But please remember we concentrate only on 38% to 61% area of this Fibonacci Retracements for the REVERSAL so that we can trade in the direction of the trend. Please note that Fibonacci Retracements are only valid on trending in one single direction. If there is no clear trend or swing in the direction of the trend, then there is no valid trade. Please go through the video.



That's all for now.

Good night.