The point where the price repeatedly tests, generally has an important support or resistance function, which is exactly a price area. As shown in Figure 1:
figure 1)
When we find such a price area that has been tested repeatedly, it should be worthy of our attention, and it may become our excellent entry point.
This week's golden day trend has such a market, see Figure (2):
figure 2)
Point A is a horizontal resistance level of a wave crest. Point B continues the upward trend after breaking through this resistance level, and the resistance level turns into a support level. In the future market, the price has repeatedly retested the position 1930.27 area, at least 6 times, indicating that 1930 has a relatively high level. Strong support is located in the upward trend of the structure, so we can enter the market with long positions in the 1930 area, and the wide stop loss can be at point C of the trough.
Let’s look at another example of the trend of a currency pair this week, as shown in Figure (3):
image 3)
Points A and B are in a downward trend, establishing a downward trend line, and the price will test the resistance level 4 times in the future market. The first 1, 2, and 3 tests are all opportunities for us to short until the price no longer hits a new low. The fifth The second is the back step test after the breakthrough, which belongs to the 123 rule of back step to do long points.
After the downtrend line is broken, we find that points 2, 3, and 4 are at the same horizontal line, forming price suppression and establishing a short-term strong resistance level. When the price breaks through the resistance level, it turns into a support level. Tests 6 and 7 are both points for long entry.
The above two cases show that the price horizontal line or trend line is confirmed as an important support and resistance level after repeated testing, and then becomes our excellent entry point.
have to be aware of is:
(1) Horizontal line and trend line are a price area, not a specific price point.
(2) When testing, it can be a touch or no touch or a false breakthrough, as long as the overall proof that the position has an important support or resistance level.
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