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Support/Resistance Indicator
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Author:  slipshod [ Sat Mar 14, 2015 1:53 am ]
Post subject:  Support/Resistance Indicator
Tommaso, sure no problem - I've gotten into the habit of using imgur for images with other forums, will try to remember to attach them here instead (which I used to do a lot, I'd just forgotten).
Author:  slipshod [ Sat Mar 14, 2015 2:06 am ]
Post subject:  Support/Resistance Indicator
AnotherBrian » Sat Mar 14, 2015 3:43 am wrote:The problem with Sams method is that he is trying to get you to sign up with his firm for training. He never goes into detail about zones enough to teach people what makes a good zone is not enough. There is more to it. Some think it is a counter trend method, and it can be used that way. The best way to use S/D is to trade with the trend using this method for pullbacks in a higher TF trend. The other part that I have learned is to only go with Grade A levels, fresh levels with a hell of a move away. Here is another problem, what is fresh? What if this fresh level was a re-visit to a previous level? And then they talk about aligning with other markets.... All this is listed under there scoring system for rating the levels. I'm no expert yet but I am way better then I used to be.
Yes, that's exactly the kind of thing I was thinking too. Also I guess a trader could get used to taking lots of small losses which are outweighed by the occasional big profit trade. I need to get in and do a ton more manual backtesting, which is all I've been doing lately...
I have gone back in time to see what levels worked and taken screen shots of them to remind me. But you are right, there are lots of levels that don't hold. I find that if its going to work it will work right away so I go for a close breakeven setting, such as 1:1.

I don't know if an EA can capture what it takes. To me, the indicator should look at how fast and how far the move was away to determine if it is a zone with any merit. A gradual move away isn't what I look for, I'm looking for a race car off the start line.
I don't think an EA would have any chance of Seiden's ideas or derivations thereof. Hey, how about we create a thread in the manual systems section for all things Seiden & see where that takes us?
The idea of mixing HGI with your indi is good and I think has merit. But take a look at the zoomed out chart and see if its a strong trending market, in what direction, or flat, and you will know what that is working right now. I noticed you were looking at USDCAD, and this pair is at a strong supply level.
HGI is just something I was experimenting with, to see if it'd produce useful signals in conjunction with support/resistance zones. It does (and the signals are contrary to the direction Bob uses), but only if its a slow reaction off the zone that usually results in a reversal into a new trend. HGI cannot keep up with fast Seidenesque reactions.
More reading :D Thanks for sharing!
Author:  aaaaaa [ Fri Apr 24, 2015 1:34 pm ]
Post subject:  Support/Resistance Indicator
Hi,

could someone make something like HGI matrix for this indicator, so that alarm would start when an instrument from youre watchlist would hits the zone ?
Author:  AnotherBrian [ Tue Jun 16, 2015 9:36 pm ]
Post subject:  Support/Resistance Indicator
Mr. Slipshod;

Wondering if you would like to work together to refine the levels.

I've been busy coding an EA that draws levels, but it is purely based on consolidation area, number of bars within the area, and the distance of the break. Got me thinking, maybe just some qualifications of the SSR levels will do the trick? But when I look at your code my brain locks up. I'm sure I could understand it if I took the time.

Here's what I'm thinking.
So we take the levels this code gives us and we check things to qualify the level, sort of according to the Supply Demand score sheet you may have seen (odds enhancers)
This would be things like;
must have a leg into the level
must have a leg out of the level
must have between x and y bars
must leave the level and travel at least X time the zone width

The code I've come up with doesn't show many levels, see pic below. Work in progress, haven't finished it, about 75% there. With some pairs, it can nail the zone, others it will tell you where price is going to pause.

Anyway, I'll leave it at that and wait for some feedback.
GBPNZDH4.png
Author:  slipshod [ Wed Jun 17, 2015 4:54 am ]
Post subject:  Support/Resistance Indicator
Hey Brian, interesting post!

Quick question - why would you create this as an EA rather than an indicator? I'm guessing its because you'd like to extend it into automated trading of some sort, but in that case I think the better approach would be to write the level calculation functionality in a library, use the library in an indicator to visually draw the levels, and use the library in an EA for trades.

I've put a lot of time & effort into Seiden's supply/demand zones, but in the end I keep coming back to the more traditional support & resistance zones as I find that they're far more reliable, as shown in the following chart.
trading1.png
Here's the same chart again with manually-drawn Demand zones, based on the hesitation area with a sharp spike upwards showing buyers overwhelming sellers.
trading2.png
The orange arrows show potential long entry points in the uptrend. Only once does a Demand zone provide an entry, with a second opportunity for going long at the same price later on when its more of a Support zone. By way of contrast, twice Resistance-turned-Support zones provided excellent entry points & showed why I wanted them preserved in the indicator as "Turncoats", whereas two Demand zones are still waiting for the price to visit them.

The other issue I have with Seiden's zones is that there's often a high level of discretionary judgement in where they're drawn. With Support & Resistance its far more straightforward - take the area in which the price pivoted and use that as the zone.

I'm not saying that Seiden's methods are unusable by any means, indeed where I see a really standout zone I will add it to the chart manually if there's no traditional S/R zones nearby. But most of the time S/R is doing the job for me, and I rarely see the need to go beyond it. The logic behind Seiden's zones is undeniable, so why is it that the market often (not always) seems to ignore them & pays attention to S/R zones instead? Possibly because the big banks are still trading the old way, and haven't bought into Seiden's methods?

Btw you might have noticed the use of Andrews forks on the chart, which I've always wanted to get into & only recently had the time to really study & make sense of them and how best to employ them. I've included a link on my sig below to a demo account where I'm exploring the forks along with S/R levels and chart patterns on intraday timeframes.
Author:  slipshod [ Fri Jun 19, 2015 5:00 am ]
Post subject:  Support/Resistance Indicator
Here's an example of a Seiden Supply zone identifying a trade that Support/Resistance zones failed to identify...
trading3.png
The Supply zone is created by the pause followed by another sharp drop, and its just a little lower than the support-turned-resistance zone above it. When the price bounced back up to the Supply zone it touched into it 3 times over a 16 hour period, rejected on each occasion, then there was another push down to the support zone below.

That's the only time the Supply zone worked, as the price became trapped in a tightening range before touching Support one last time and charging up to push through the old Supply and hit Resistance. As Brian said earlier, Seiden's zones seem to work quite well for entries when the price retraces during a trend, and so it proved on this occasion.

Edit: Having said the above, if I was hand-drawing Support/Resistance zones on this chart it'd look as follows, and once again I'm back to the price turning in S/R zones with no need for Seiden's...
trading4.png
Author:  slipshod [ Fri Jun 19, 2015 2:24 pm ]
Post subject:  Support/Resistance Indicator
One more observation - here's the EURJPY Daily chart. Note the yellow Supply zone (which I drew manually) created by the drop-pause-drop, and how its stopped the recent rise in its tracks.
trading5.png
However, if you look further back you can see that this area was previously resistance, blown straight through on the next rise which indicated that it may act as support, but when the price returned it only created the pause which resulted in the identification of the area as a "fresh" Seiden supply zone.
trading6.png
This kind of behaviour is quite common - if a support/resistance zone fails to hold but there's a hesitation as the price breaks it, a Seiden supply/demand zone is often created in its place.
Author:  slipshod [ Sat Jun 20, 2015 4:55 am ]
Post subject:  Support/Resistance Indicator
Sorry to flood this thread with so many charts lately ... but here's another :)
trading7.png
This is the US Dollar Index. There's clear resistance in red, and support in green, both of which provided good trade entries when revisited. There's also an orange zone that was resistance, then turned support after being broken to the upside, then resistance after being broken downwards.

In Yellow are some Seiden zones. The higher one is Supply, created by the pause in the down move after the double top. This zone provided an excellent short entry when it was visited a couple of weeks ago.

The lower is a zone created by a pause in the rise through the old orange "turncoat" zone discussed above. When the price returned it pushed hard to get through here, but rallied upwards for a day in a brief tradable spike.

The price is now in very interesting territory. Will the support zone hold for a third time, or will it break and potentially herald the start of a downtrend in the US Dollar?
Author:  AnotherBrian [ Sat Jun 20, 2015 3:48 pm ]
Post subject:  Support/Resistance Indicator
Are these charts produced using the indi posted on the first post?
Author:  slipshod [ Sat Jun 20, 2015 4:26 pm ]
Post subject:  Support/Resistance Indicator
AnotherBrian » Sun Jun 21, 2015 1:48 am wrote:Are these charts produced using the indi posted on the first post?
Where there's text on the right side of the zones saying things like "Verified Support", "Turncoat Resistance" etc, then yes its the indi from this thread. If there's no text I've drawn them in by hand, and usually say so when that's the case. The US Dollar Index chart was a screenshot from bigcharts.com that I draw zones on manually.
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