I Discovered How To Avoid Support & Resistance Manipulation In Day Trading

TL;DR

Learn how support and resistance levels can be manipulated by smart money, and discover strategies to trade effectively and avoid being manipulated. (19 words)

Transcript

Market manipulation occurs on a daily basis, right under the noses of retail traders. You witness this yourself, every day. And you’re wondering why the theory of support and resistance you read in almost every trading book, doesn’t seem to work in real markets. Today I’m sharing my experience with support and resistance trading, but in the context... Read More

Key Insights

• ⌛ Retesting multiple times weakens support or resistance levels, increasing the likelihood of a breakout.
• 💪 Strong turning points away from support or resistance levels indicate a strong imbalance between buyers and sellers, leading to explosive price movements.
• 🤑 Price manipulation occurs around support and resistance zones, as smart money takes advantage of liquidity.
• ™️ Trading against the current momentum puts traders at risk; it is advisable to trade at levels that have formed in the direction of the most recent high or low.
• 😃 Big round number prices often serve as high probability support and resistance levels.
• 🪤 Retail traders often fall into traps set by market makers, who use consolidation periods and indicators to induce buying or selling activity.
• 🤑 Understanding the tactics and strategies of smart money can help traders align themselves with their movements.

Questions & Answers

Q: Why do strong support or resistance levels that are retested multiple times indicate a higher likelihood of breaking?

Retesting support or resistance levels multiple times suggests a lack of conviction among buyers, as waiting buy orders are executed and fewer willing buyers remain at that level. Once all the buyers are gone, price can easily move through that level.

Q: How can strong turning points away from support or resistance levels be used as high probability price levels?

Strong turning points indicate a strong imbalance between buyers and sellers and lead to explosive price movements. When price revisits these areas, there is likely to be significant buy interest, making it an attractive opportunity to buy at support.

Q: What is price manipulation around support and resistance levels and why do smart money players engage in it?

Price manipulation is a series of actions carried out by smart money to induce buying or selling activity from other traders. Smart money players cannot simply enter the market with their massive position sizes, so they seek areas with enough liquidity, which often exist around support and resistance zones.

Q: Why are big round number prices significant in determining support and resistance levels?

Big round number prices, such as whole numbers or significant psychological levels, often act as high probability support and resistance levels. Reversals are likely to occur near these levels, making them valuable areas to watch for trading opportunities.

Summary & Key Takeaways

• Support and resistance levels that are tested multiple times are more likely to break, as they indicate a lack of conviction among buyers.

• Strong turning points away from support or resistance levels signal a strong imbalance between buyers and sellers, leading to explosive price movements.

• Price manipulation occurs around support and resistance zones, as smart money takes advantage of liquidity and induces buying or selling activity from other traders.