Check higher time frames for significant support resistance levels
What should you do when price gets stuck?
Old support resistance levels do not go away. They only get nastier. This is what happens when USDJPY meets this multi-decade level that we brought up in this story.
The first clue that price might be up against an old adversary
Is when you see price hammering a level for months and that level just would not break. 5-months is a long time when most forex traders hold their positions from hours to a few days only at most. As we can see in this chart of USDJPY, that support between 101.20 and 101.60 has been tried and tested quite a number of times since January this year. The level is not new. Inspecting the chart over the past few months we can see from labels 7-9 that it was also significant in the past.
Look up (at higher time frames) more often
Levels on higher time frames are stronger. This is a rule that every trader dealing with multiple time frames has to be aware. So when price goes knock knock knock but the level just would not bulge, inspect higher time frame charts. Since our starting point is the daily chart, a look at weekly or monthly charts is necessary.
And then here lies the answer.
USDJPY 5-month support also a multi-decade support resistance level
What should one do now with this level? Go back to our old post where we prescribed some tips to read this level. To summarise, these two may be most handy:
- Do not expect it to break.
- If it breaks, expect big move.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.