Raghee Horner of InterbankFX talks about using multiple chart views to find support and resistance.
Firstly, it should be noted, that using Support and Resistance in trading, whether that be currencies, commodities, shares or whatever, is paramount. If you do not use S/R in your trading, yet you are still making money, hats off to you, because without it, it’s almost impossible to trade successfully.
Raghee mentions, “Multiple chart views are always helpful for me when I am analyzing a single pair and even a single time frame. Each chart view can have an individual tool that will help me identify support and resistance levels within the context of a trend. I believe that if handed a chart most of us would likely find many of the same support and resistance levels on the chart and therefore each individual’s trading decisions don’t usually come down to at which price they will react but HOW they will react at that price.”
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I think her last point is very interesting and very important. If two different traders were given a naked chart, the first thing they’d do is identify key support and resistance levels. Quite often, they would outline the same levels, (ok, there might be some differences, but generally speaking it would be similar, especially concerning the major structural points). But then the next question is – if these traders outline the same S/R levels, will they in turn, trade these levels differently?
She then goes on to talk about the different tools used for support and resistance.
“Whether the tools are chart patterns, moving averages, psychological levels, or Fibonacci Retracement and Extension levels they are all identifying support and resistance.”