S/R Strategies

For all strategies, finding multiple confluences is a great way to increase the chances of a successful trade. I will often layer Fibonacci and Volume Profile levels over the S/R levels. Look for places where the different approaches point to the same price range and trade these areas of high confluence more confidently and with greater size.

note

Here the bounce happened at an S/R level, in the fib golden zone ( .5 to .618 ) and at the bottom of a volume profile node.

Support Becomes Resistance (SBR)

This is one of the most successful strategies leveraging the indicator levels and works in both the Long and Short directions. The typical trade involves identifying a critical level (one where consolidating has happened at that level before breaking). Scaling in as price approaches the level and having a stop under (or over depending on the direction of the trade) the level. This creates a good risk to reward ratio.

• Find an area of strong reaction where price jumps away from a level.
• Finding more than one reaction increases the likelihood of that level being defended.
• Wait for the level to be breached.
• Wait for the price to retest this level and take the trade in the direction of the initial break.
• Can be applied to all timeframes but 5 and 30 minutes works well for intraday.

GAP Rejection (GR)

• Gaps like to be filled but they also often act as resistance before getting filled.
• Gaps can be treated as strong resistance / support for reversal plays.

GAP Close Reversal (GCR)

• Once a GAP is closed you will often see at least a scalp-able reversal happen. This is especially true if it takes several days to close the gap.

DPOC Bounces (DPOCB)

• The DPOC often acts as a strong support / resistance level and can be played as a bounce spot.
• Representing the highest volume node over the last X days this area represents where most of the shares have been traded.

Final Stand (FS)

• This setup involves a level which has been tested many times. If it finally breaks through you can take a trade in the direction of the break with a tight stop above the level.
• This setup is better if there is an additional confluence, in the picture below there was a head and shoulders pattern forming.
• This setup can also be played as a Support Becomes Resistance play by waiting for a retest instead of playing the break directly.

Bounce And Pop (BAP)

• This setup involves a level which has been tested, rejects and then pushes back through.
• These tend to continue up or down to the next critical level and will often have a decent push following the level break.

Failed Breakdown / Breakout (FB)

• This setup involves a level which has been tested and bounced. Often there will be another push above or below to trap traders before reversing hard.
• Enter once price crosses above the high of the breakdown bar or crosses below the low of the breakout bar and ride to the next level.