Support And Resistance Areas

When looking at resistance and support areas you have to know that they are being part of a channel’s structure. Upper part of the channel meaning resistance, lower part meaning support. Once broken, they turn into the opposite. Now, this may be the classical approach and it is very much valid, but what I would like to show you under this sub chapter is the concept of the 50% line once the channel is established and what to expect after the resistance/support area of the channel is broken.

This sub chapter will have four different recordings basically going through the same thing over and over again, building different channels once one is broken as this is one of the safest and simple things/rules that should keep a trader on the safe side.

So with this approach by the time the upper/lower part of the channel is broken, you might say that previous highs/lows are a top/bottom, depending on the time frame you are looking at. Personally for this kind of approach I prefer the 1h chart as it offers you the possibility of a quick exit when price breaks.

Concepts like the tendency for the 50% line to attract, waiting for the next swing before drawing a channel, establishing the upper/lower trend line of the channel based on past price action, and taking the time into consideration are treated under this sub chapter and you will see why this is one of my preferred techniques to be used because under this approach you are always on the right side of the market.