Exactly, well sorta

When I first started in Forex, I took an excellent course, aspects of which are  only now starting to sink in.  The course started with support, resistance and trends.   I studied those very diligently and soon was drawing great lines over all my charts.   I wasn’t familiar with many of the indicators at that point. Well honestly stated, I wasn’t familiar with ANY indicators at that point. 

The end result was a chart with many lines. And, as I’m sure many traders out there are all too well aware, it’s really hard to see the chart with all those lines.  In addition, I saw new ways of looking at the charts, most of which were not correct.  

I continued to ask questions about the values of support and resistance.  Was that EURUSD resistance at 1.335 or 1.336?  What about the other time frames? Do I plot those as well?  Where should I buy now that I have all these lines and the trend is going up? Wait, the trend went down!

And so on.

Recently I noticed that support and resistance, while very critical to my current method of trading, was not an exact science.  Sure, everyone can give out those levels. And they’re all probably right.  But it wasn’t exact. They dont match up.  

I revisted one of the begining courses I took and heard something new: “Dont expect the lines to be exact”.  I had never really heard/paid attention  to that before.  So I took a very dramatic step: I emptied my charts of all indicators!  Wow, just candles.  I took a look at the different time frames of one currency pair.  I started plotting on each time frame what I thought was support and resistance. I limited it to one support line and one resistance line per time frame.  All of a sudden, my trading improved. 

Don’t expect technical analysis to be too exact

Posted on March 31st, 2009
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