Interpret Price at Key Reference Levels Not at Tick-by-Tick Price.
Identifying key identified price levels in advance will help me understand the direction price wants to go. When looking at a chart to see what is happening or not happening I must have a frame of reference. The live bar is only useful in relation to established significant qualified levels, is price moving towards or away from a level. Chances are if it’s not going towards one level then it’s going to the other. Those levels can be support or resistance areas, higher highs, lower highs, lower lows, higher lows, and or Fibonacci retracements or extension areas.
Things to identify on a chart:
Current and recent impulse legs. Ideal impulse leg is from a LH to a LL and HL to HH with stong bars majority being of the same colour.
Fib retracement levels of impulse legs and adjusted as the leg lengthens.
Fib extension levels, drawn once a strong key fib retrace level has been hit, especially, .382 and .618, or a full retracement has occurred.
Horizontal lines at support and resistance levels.
To test this idea, below I have placed the 4-hr chart for AUDUSD, USDCHF and GBPUSD with identified levels and marked areas for possible trades. I will update each of these charts after the close on Friday or if levels achieved before then.
Identifying levels and key structure areas should help the worry and uncertainty of trading, but more importantly give me defined things to look for on a chart.
AUDUSD continues downtrend and moves down another leg creating a new potential resistance region.
Look for price to Not get back up to .98382 for at least several days.
Next support area is likely .9581 which is the May 26th 2012 low.
Even though in a strong down trend be careful with shorts, no shorts inside previous days bottom wicks until price closes below. Ideal shorting area, if price gets back to it would be a .618 of mot recent 4 hour down leg.
NO longs until a lower high has been set and taken out.