Horizontal levels that is classic support and resistance.
Although this is not purely algorithmic concept but it works well.
Look at these 3 charts and these 3 levels.
How well price respects these levels.
đ¨we are not looking to enter in trades at these levels.
We are looking for confluences to take trades.
>basic idea is to identify levels at which price has reversed in past.
>price tends to react at some specific levels and our aim is to use those levels as a confluence to our trading setups.
â˘These levels should be used and drawn only on htf.
â˘Works best on 1day and 4hr time frame.
â˘Not wise to draw these levels below 4hr time frame.
â HOW TO IDENTIFY THESE KEY LEVELS
>we start with 1day timeframe for macro perspective and then move on to 4hr and 1hr.
> look for levels at which price has reversed twice or more times in past.
>shortcut:- use line chart instead of bars for easy identification
â INCREASE PROBABILITY OF LEVELS
>to increase probability of reactions at these levels look to draw a box around these key levels and tag all nearby wicks with that particular box.
>use these htf levels and look for htf+ltf reversals at these levels to trade.
â IMPORTANT NOTES
1. these levels wont always work
use them as confluence to increase probability of winning
2. these levels will work best on htf(1day 4hr)
will work for 1 hr as well but i wont suggest using in below 1hr time frame
3. look for atleast 2 tags on a certain level.
4. as retail logic or basic ta always suggest
support turns into resistance and vice versa
i personally wont advice you to trade on breakouts
5.confluece to look out for with s/r
-trendlines, -monday range, -frvp, fibs
6.width of box would increase as you move on smaller timeframe which means that the level range is big at which we are expecting a reversal thats why i suggest to use them as confluence and not to trade.