I take this opportunity to ask you a little dilemma referred to Technical Analysis:
I usually trade Daily Time Frames and occasionally also trade the 4H or 1H time Frames but my concerns is related to reversals,
I don’t know if I’m 100% right but on my experience and after reading some Sam Seiden articles I can see that all the reversal occur on HIGHER TIME FRAMES, for example if we are trading a daily the WEEKLY SUPPORT OR DEMAND are the zones in which the stock will probably reverse,
My big concern that comes to me is that there are times in which the stock do not reach the daily supply or demand zone and it starts to reverse before we can take action:
For example, on this STOCK, this is the graph from Daily Time Frame, it’s highly probably thtat the stock does not rise a 3.26% more till the daily supply zone so someone that are waiting to sell on the daily zone maybe didn’t realize that the stock is exactly on a zone of strong reversal if you see the 2nd graph below, which is the same graph only on WEEKLY time frame,
So anyone that does not realize about this important detail maybe by looking only the daily time frame or the daily supply zone in this particular case has not the chance to get that additional return because the stock reverse well before and when he want to sell it’s too late.
I’m asking you because my base of trading is to see at least 3 different times to enter the position, I usually use 4h to enter, daily to figure out the daily and supply zones and WEEKLY to see where reversal would take place,
I also combine your excellent strategy of enter on daily zones with the alarm of multiple swing on 1H to enter the position, I already read that you usually wait for the 2nd swing by the way,
My Answer:
Hey there,
It’s normal for the price to sometimes bounce at a weekly zone before even hitting the daily one.
Markets can be unpredictable!
One way to tackle this is to set a limit order at the weekly zone, and then, if you see a big move or a clear engulfing candle, adjust your stop loss to the high or low of that move. This way, you’re still in the trade but with a bit less risk on the weekly zone.
Of course, there’s no guarantee that the price will always reverse at a zone.
Sometimes, even with a limit order, it might just power through and cause bigger losses. So, it’s crucial to weigh the pros and cons and see how this strategy fits with your overall trading style.
Now, about stocks and S&D zones… I’m not really a stock whiz, so I can’t say for sure how they interact. Generally, higher timeframe zones tend to be more reliable, but it’s always a good idea to do your own research and backtesting to be sure.
I’ve attached that book for you – enjoy! What other books are you planning to read?
Hope this helps!
Talk soon,
PAN