As an intraday trader there are TWO S/R levels that are always on my chart.
- The Prior Day’s High
- The Prior Day’s Low
For a market with a day session only these levels are obvious.
For markets with 24 hour data the prior day’s high and low will be taken from the primary session (eg. RTH for CL or emini’s; UK/US sessions for forex pairs).
I almost always expect some kind of reaction at the Prior Day’s High or Low.
Of course, that doesn’t always make this game easy.
There are never guarantees.
As we saw in this article, every price interaction with S/R is unique:Â https://yourtradingcoach.org/trading-process-and-strategy/every-price-interaction-with-support-or-resistance-is-unique/
Sometimes price blows right through the level.
Other times it just gets really messy.
Let’s look at a messy one… where I over-managed the position as a result of my difficulty in handling the lack of conviction in price movement… but where persistence led to a positive outcome.
(I’m not really impressed with this sequence but feel it’s good to show imperfect trading at times. In fact, I debated as to whether this article should really be called “Sometimes trading is just messy!â€)
The trading was carried out with the following timeframes: HTF (5 min), TTF (1 min), LTF (combination of 2-range and 15-sec).
We’ll start with the HTF in order to define the market structure.
My expectations for price movement from the open are as follows:
Note how the prior day closed with a sharp move lower at A. The gap up open at B, although still within the prior day’s range, will provide a small degree of shock value. That, plus the fact that the overnight data had a seven hour uptrend leading into the open, leads me to expect a rally to test the prior day’s high.
Scenario 1 is my preferred option. The test of the resistance level breaks to new highs and shows price acceptance in this new area. If this eventuates I’ll be seeking opportunity long on the first pullback after price acceptance and will anticipate a potential trend day as price is in a fairly clear region where it hasn’t been for around two weeks.
Scenario 2 will involve weaker movement towards resistance and/or rejection of any break of the prior day’s high. In this case I’ll look for entry short on the failed break or any subsequent retests. The expected environment will be a little more unknown. Various levels (C, D & E) could act to provide some degree of support, leaving us with the likelihood of either a slow, choppy downtrend or a sideways ranging market.
Expectations will of course be amended as we progress bar-by-bar through the session.
Looking now at the TTF we can see the initial approach from the open towards the resistance area. Ignoring the trade (long from the test of range support) we see that there was certainly no great bullish strength on the rally towards resistance.
While I would have loved a smooth and rapid drop to current session lows, it wasn’t to be.
As stated earlier… every price interaction with S/R is unique… and some of them get a little messy.
As an intraday trader there are TWO S/R levels that are always on my chart.
- The Prior Day’s High
- The Prior Day’s Low
I almost always expect some kind of reaction at the Prior Day’s High or Low.
Of course, that doesn’t always make this game easy.
Happy trading,
Lance Beggs