Most Effective Support & Resistance

If you’re new to financial markets and you want to know when is the best time to buy and when is the best time to sell, then I’m sure you’ve heard of the terms support and resistance. In this video, I’m going to show you how to find the most effective support and resistance zones to make sure you’re finding the best probable trades. If you’re new to the channel and you’re wondering who’s this guy speaking, my name is Matt Jimenez. I’m an entrepreneur, and for the last 6 years, I’ve been able to work with the greatest Financial Minds on the planet. I’m here to pour into you guys everything that they poured into me. Now, without further ado, let’s get right to it.

Almost everybody in the world that uses technical analysis reverts to these main key points, and these are the key points that I’m going to drive home today. It’s kind of like Bruce Lee. He’s like, “Don’t Fear the man that practices a thousand punches, but fear the man that practiced one punch a thousand times.” So, when it comes to technical analysis, you want to practice the basics, and the basics start with support and resistance. In this video, I want to show you exactly how to find the best probable setups on support and resistance and how to actually locate where this support and resistance may be found.

If you don’t know what support and resistance is, let’s start with support. Support is merely just an area where buyers congregate, meaning more than likely if we get to this area of the chart, we’re going to experience buying pressure. Think of it like a trampoline. If an asset price is above a support level, more often than not, as it comes down and reaches the support level, it will find buyers to inject capital that will push this asset higher. That’s the thesis behind support.

Now, resistance is going to be the complete opposite of support. Think of it as a ceiling where it can’t go past. So, as an asset price is rising, it’ll reach a resistance level where sellers will be congregating.

When addressing asset prices on a chart and you want to become a buyer, what are you going to do? That’s right, you’re going to look for support as you want to find an area where other buyers will be. Now, let’s flip the script. Let’s say you’re looking at a chart and you want to become a seller. You’re going to be looking for resistance levels to become a seller because you have more people betting with you that the asset price will be going down, therefore pushing asset prices down. All assets are a playground of buyers and sellers.

Now, let’s jump to the charts, and I’m going to show you exactly how I find my support and resistance levels, which have served me for the last 8 years dabbling in financial markets.

Now, I have the gold chart pulled up for everybody, and I want to show you exactly how I find my support and resistance levels. Since this chart is screaming resistance at me, I’m going to go ahead and address resistance levels first. Let me go ahead and grab this line, and I’m going to plot it right here. I plotted it at 2031. One thing that I want to address is this goes for both support and resistance. Support or resistance is never an exact price point but rather it is a zone. What I like to do is grab the rectangles and plot them around my key points of interest.

This is a resistance key point of interest for me; that’s why I have this line here, which you guys watched me plot, and this rectangle is to highlight in this area. I know there’s going to be sellers. Now, how do I know that? How can I assure myself that there are sellers in this area? Well, let’s just look at the price action. This was the first attempt as it came up and got rejected and came down. So, let’s go ahead and just put a little circle here just to highlight for you guys. Then let me grab the circle again. As we came down and approached this exact zone again, what happened? We got rejected and came right back down. Let me go ahead and plot this here. So, this is three touches. Once you have two touches, that is more than enough evidence that we have a zone that can possibly be our key point of selling.

Over here, again, we have the third key point of interest. One other thing that I’d like to highlight in this exact setup is the kangaroo tail formations. So, this Candlestick here is a kangaroo tail. This one here is a kangaroo tail, and both of those are bearish kangaroo tails, meaning we’re looking to sell. So, not only are we in a resistance area where we want to be a seller, we actually have the perfect selling signal that we are going to come down in price. You have the kangaroo tail here, right on the resistance zone, which screams sell, which it shortly did right after.

If you don’t know what I’m talking about when I’m referring to kangaroo tail, just check out my last video, which addresses the most profitable Candlestick formations. So, this is a resistance level. Notice how I drew this zone on a monthly time frame. The reason being is because I always like using higher time frames for technical analysis. One, it always has more merit to its zones, meaning it’s respected more often.

And two, it allows me to know the bigger move rather than tracking a 30-minute chart, which is very intraday. I like to know the overall consensus of where we’re possibly heading. And when we’re looking at monthly charts and weekly charts and we’re finding our key points of interest, the lower time frames will often signal an opportunity for us to find our entry into a position based on the monthly bias.

In this monthly bias, if we had a short position here or a short position here, I would have dropped down from the monthly down to a weekly to see where I can get a better entry. So here we have another kangaroo tail on the weekly, and here is our setup. What I like to do on the kangaroo tails, if you haven’t watched the video, like I said earlier, just go ahead and watch the last video I made. So entry would be right around there, stop loss above highs, and we always have to go for at least a 2R, which means we’re looking to gain two times more than we are willing to risk. And I like to go based on structure. So, if you guys don’t know what the structure is, let me just go ahead and grab this rectangle for you guys, and I’m just going to draw. Structure is all of this.

So, this area where you see prices getting choppy, then again, if I just move it over, it gets choppy again right in that area of structure. Move it over again, lightly below that structure. So, I like to use structure as data points for me to know where we can experience volatility and/or where our targets could be, where we may be headed, where I could put a take profit or a stop loss. So, in this case, I like to put the stop loss always above the highs, out of the zone, that way it’s hard to stop me out. And then I like to look left, always looking at…
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Jeff Sekinger

Founder & CEO, Nurp LLC

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