Creation of SNR (Identifying fresh levels)

TL;DR

This video explains how support and resistance levels are created and their significance in trading.

Transcript

is the second time recording a nearly 40 minute video I think it's a time for me to keep things short it was popping we're back for those of you guys who are watching this video right now you do not know that there's actually been a previous upload of this exact video to my channel missing half of my freaking screen or at least a quarter of my frea... Read More

Key Insights

• 💁 Support and resistance levels are crucial in identifying potential price reversals, formed by the interaction of buy and sell candles.
• 🎚️ Fresh levels denote stronger potential support/resistance, compared to tested levels that may lose reliability over time.
• 🍳 A confirmed break of a level requires a candle's body closure outside the defined support or resistance, vital for determining future price movements.
• 🍳 The concepts of SBR (support break become resistance) and RBS (resistance break become support) help traders anticipate market changes based on structural shifts.
• 🎚️ Traders should maintain a clear understanding of their trading strategies in relation to SNR levels, using confirmation signals for entry.
• 🎚️ The length of time taken for a price to return to a level can provide insights into the potential strength and impact of that level in future movements.
• 🍝 Personal experiences and learning from past mistakes can significantly enhance a trader's understanding and application of SNR concepts.

Questions & Answers

Q: What are support and resistance levels, and how are they formed?

Support and resistance levels are critical concepts in trading that indicate potential price points where the market may reverse or consolidate. They're formed by the closing of specific candles: a resistance level is created when a sell candle follows a buy candle, while a support level is formed when a buy candle follows a sell candle. These levels are essential for traders to anticipate market movements.

Q: What is the difference between fresh and tested support or resistance levels?

Fresh support or resistance levels are defined as those that have not been touched by prior price action, indicating they are untested and potentially stronger. In contrast, tested levels have been approached multiple times, which can weaken their effectiveness. Understanding this difference helps traders assess potential trade risks better.

Q: How can traders determine if a support or resistance level has been broken?

A support or resistance level is considered broken when the body of a candle closes above a resistance or below a support line. The closure is crucial because even if price touches these levels, only a definitive close above or below confirms the breach, allowing traders to adjust their strategies accordingly.

Q: What does the term "SBR" and its significance in trading mean?

"SBR" stands for Support Break Resistance, denoting a condition where a price that previously found support has now become resistance after breaking below that level. This transformation is significant for traders as it indicates a potential area of selling pressure and can inform future trading decisions.

Q: What advice is given regarding entering trades using support and resistance levels?

The presenter emphasizes the importance of understanding the overall market structure and the specific context around support and resistance. He advises traders to look for confirmation around these levels, such as candle closures, rather than relying solely on touching a level to enter a trade.

Q: How do multiple tests of a support or resistance level affect trading decisions?

When a support or resistance level is tested multiple times, its effectiveness may diminish, as traders might believe the price can break through. The presenter suggests that the longer it takes for price to return to a level, the more significant the reaction can be, which is an important consideration for making informed trading decisions.

Summary & Key Takeaways

• The video discusses the creation of support and resistance (SNR) levels, emphasizing that they are formed from two specific candle types: buy and sell candles.

• The presenter clarifies the difference between fresh and tested levels of support and resistance, highlighting how multiple tests can affect their reliability in trading.

• Tips and strategies from personal experiences are shared to help viewers identify and understand SNR levels for better trading decisions.