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Can the real support and resistance please stand up !

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  • Can the real support and resistance please stand up !

    Support and resistances are the bread and butter of TA. It’s so important that without a full understanding of these? You really can’t trade.

    What exactly is supported? Which support is the “right” support and when do we even correspond or react to them?
    One of the most frustrating parts about TA is that it can and will always be interpreted by different people, differently.
    Since there is no “right” way of interpreting these, it becomes extremely frustrating for most. Unfortunately, this is the nature of TA…It is not hard science, not a binary and there always will be different opinions about the market. This is why the market will always be “perfect”

    Look at the twos charts here with the 4 variations. horizontal supports and trendline support:

    Click image for larger version

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    Click image for larger version

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    How then can one still trend with so many variations? The only answer is through an intense series of backtesting. To do that, one will have first have to:
    • 1) Understand the market structure
    • 2) Test understanding of market structure through backtesting /demo
    • 3) Develop a strategy that can tackle either breakout, trend, or Reversal
    • 4) TEST all variations of interpreting support and resistance with YOUR personal strategies over a specific length of time
    • 5) IF the system does not work? REPEAT AND TRY AGAIN until you have a proven system
    • 6) Only through extensive, honest proven backtesting, then can one be ready to be a successful trader. Unfortunately, anything else is just gambling.