How To Draw Support And Resistance Accurately (Video 5 Of 12)

you might be wondering hey Rainer how do you draw this areas man so that's what we'll cover right now so a few things to share number one if the market is trending you only want to draw the two most recent swing points so let me explain so let's say if the market is in an uptrend right hit higher pull back hit higher pull back hit higher pull back and hit higher so at this point you have you know a number of Swing Low you have one two one here two here and three but my suggestion is to draw draw the two more recent swing low as support meaning you just draw a support like this and then another one over here why do you not want to consider this one here and it's very simple because when the market is trending higher right yes it could make a pullback and where could it pull back into I'm guessing probably into one of this areas over here this or this the market can pull back into this swing low this lower one but if it does right then you would realize that this Market is no longer in an uptrend because if the price could come back all the way down here into this level here you can see that you can imagine that this uptrend is no longer intact maybe even in a downtrend if if the market is in the downtrend then what the heck am I doing trying to buy at this level so this is why I only pay attention to the two most recent swing lows and don't worry I'll share with you a few chart examples later on but that is how I would draw my support and resistance in the trending market so likewise if the market is let's say you know heading down lower and you have numerous swing highs to reference I would just you know draw my resistance possibly at this one here and at this one here and of course right if this is a previous support which could become resistance I would also you know highlight it on the chart but in terms of Swing points right the swing highs these would be the two most recent swing highs that I would pay attention to on the other hand if you have a range market then it's uh pretty simple just draw the highs and lows of the range and adjust it right to get the most number of touches right so I'll explain that shortly so let's have a look at a few charting examples so this is Euro against the Japanese y this is the daily time frame just reset okay so you can see over here where should I or where should we draw our area of support now the way I will do this is here I would take this level here and draw one here this is the most recent swing low and another one over here and that's it right this will be the two area of support I will pay attention to but also bear in mind that this over here could be previous resistance which become support remember once price breaks both resistance it could become support so this is actually another level that's worth right paying attention to and I will draw it on the chart so if you ask me right for this uptrend this will be my area of support on this chart why don't I draw let's say over here or over here very simple if the price can come back all the way down into this lows over here this could be in the downtrend already so instead of you know wanting to buy at this support I would rather be looking for selling opportunities at this previous area you know where previous uh support could become resistance so I'm going to shift right my dynamic right I'm no longer looking for buying opportunities because if the market is in a downtrend we should be looking for selling opportunities so this is why I just pay attention to the most recent swing points in the market another one dollar against the South African rent so same thing what is the market structure if you look at this this Market is in a downtrend so pay attention to the two most recent swing points it will be this one here and possibly this one over here okay so this will be the two areas on the chart that I will pay attention to this is where previous support could become resistance and this right clearly is an area of resistance right tested once two times three times and four times over here so the previous example I had three levels this one I have two so there's some kind of discretion over here it's not like an exact science where you can only have two no if the chart right makes sense if it permits right I can have you know three potential support resistance areas on the chart okay and one last final example okay so this one dollar USD against Singapore dollar so if you look at this you would see that hm is this in a downtrend or is this in a Range so if you zoom out your charts right you can see that this one long-term wise it's in a downtrend but if you zoom in a little bit like this right you would say that huh this is not exactly like a downtrend this seems like a little bit more of a range and I would say you're not wrong so the way I would do this is again I would draw right the key areas on on the chart so as of right now which is the nearest swing points right relative to the price right now so if you see the price right now it's over here the nearest major swing points on the chart is here between these highs and this lows over here okay so you can see this is how I would draw my support and resistance for this particular chart over here this is the highs and this is the lows so one thing to point out is that recall earlier I said that I would adjust it to get as many touches as possible so if you look at this I can actually draw my resistance smack right okay I'll see could draw it no this this is actually okay so let's talk about this one this lows right I could actually draw it maybe at this extreme Point okay at this extreme low over here but why don't I want to do that because I mentioned ear I want to get the most number of touches so if you just look back at here if I draw this extreme point I will neglect this low over here and I don't want that so let me shift it up slightly higher so I can also take into consideration this low okay so I have one touch two touch make sense so same for here right if I were to draw at this level I have one touch two touch and three Touch compared to let's say I were to only you know shift it up higher the reason why I said this is fine because if you look back here you get a number of touches here and here as well but for me personally I want to take into account the most recent touches I want to get the most re recent touches together so I'm going to adjust this slightly lower and take into consideration this as well this one here one touch two and three okay so let's have a look at another example pound against the oie so again this one here the way you draw your support and resistance you can draw at this extreme high but if you were to do that then you would you know neglect quite a bit of levels you ignore this one this one here you know and so what I'll do instead is that I would prefer to adjust this slightly lower to get the most number of touch so when I do that I now have this over here one touch two three four and five so same for this one at the lows over here drawing this area of support I don't want to draw it at the extreme level I want to adjust it so I can get the most number of touches so I'll adjust this slightly up higher and now I have one touch two and three and this is my area of support okay and this of course is my area of resistance and that's how you go about drawing your support and resistance on your chart and of course right this needs practice it's not like you know watch a 5 minute video and become a pro no you got to practice it and you know watch how the market reacts to your level in real time and from then on you will get better at drawing support and resistance and of course right this is only one way to draw support and resistance in the next section I'll share with you how you can use moving average right to do this uh to identify your area of value as well