This issue, although most of the novice operators are jumping for being too evident is the fundamental pillar to be able to do intraday and swing or trade to medium term. On this lesson we are going to learn the classification of trends, supports and resistances. We have to differentiate the long-term trend in which we base with the graph in which we operate.
The most logical thing is to look in an hour graphics and operate in 15 or in 5 even. We must never forget the trend in an hour principal and the secondary trend for the calculation of stops and risk management that. The standard classification of trends is:
- Principal: Greater than one year
- Intermediate: Between three weeks and one year.
- Short term: Duration less than three weeks
At first the determination of trends seems simple and obvious. What happens is that the theory is simple but the management of our capital to follow a trend not so much.
You must be realistic about what we see the past bull and what is happen. In many cases the entrances in tendency if they are done in the points appropriate leave us relaxed and with a feeling that the river will take us for its channel to civilization.
The problem comes from the point of entry and patience, these two factors will make let’s reveal accounts if we are too precocious or even when the price is already He has been trying to ride us a winner. At that time, one will think, but if I’m in a trend that has failed. Well the answer is simple, patience has failed at the point of entry as one of many factors to consider at the time of make an entry to the market.
Over time and with a lot of patience and tenacity they will be polishing said mistakes, but always with a cool head and remembering the bad afternoons or mornings that said behaviour has made us do.
Here again we return to the same considerations, guidelines and supports that Everyone sees, they are crystal clear. As with the indicators everything it depends on the use you make of them and the number of people who see those levels.
It is very normal for those operators that make media breaks and resistances, they are trapped suffering positions for having drawn or drawn the lines in a way not convenient.
The big fish is to say the institutional ones are experts in fishing before this type of events. Most of the public will be attentive to the great guidelines and the most evident whether they are in any currency, index or raw material. It’s when the Volume operators focus on finding where the orders are. The most normal is that these operators are the ones who force the break of a support and when is broken, they poke themselves from the other side to bring the price back to where I was before. Therefore, there are support and resistance lines that are not valid, although they are very well painted on the graphic. For this reason, always look for the most symmetrical lines with a graduation slope of 45 degrees that tend to be the ones that have enough amplitude to perform a movement with attractive ranges of return.
Let’s see then what are the definitions regarding the supports and resistances:
Supports: correspond to areas where the price is supported to take a new bullish momentum They represent levels where the purchase interest is higher than selling.
Resistances: correspond to areas where the price cannot pass over for being the force of sale greater than that of purchase.
Another of the most interesting topics would be the control areas in which the creator What it does is a consolidation of an area. This usually happens once the price already has made a strong movement and wants to consolidate an area and that the price has memory for when you go through that area again.
The importance of this concept comes to be the number of periods that the price consolidates an area because, the greater the consolidation, the stronger it will be zone. Whenever we are in trend and we have before us a zone of prior control will have to be very careful because entry into that area can make our position go to the bottom.
It is very interesting the control areas because it is more logical that they open ranges. Whole, what does this mean? Very simple, when the price is trying to attacka control zone if it is very powerful will open the doors from the maximum to the minimum of the control area or vice versa. Therefore, if we are positioned and we come across one of these areas we can be quiet in the market if you drill the control area and do it easily.
Also, if the price is finishing passing through the control area, it will be necessary to have very careful because it usually happens that the creator put the price again in the consolidation zone, precaution at the exit.
Do not miss our Learning Forex: Lesson 8