tag:blogger.com,1999:blog-2847890102780597763.post8095724904649067319..comments2023-10-30T05:35:52.421-07:00Comments on Reviewing Everything Forex: Defining Support & Resistance Levels Mathematically, A True Challenge for Automated SystemsDanielhttp://www.blogger.com/profile/00940108413648645894noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2847890102780597763.post-56007501435227950502010-03-18T09:12:49.368-07:002010-03-18T09:12:49.368-07:00Hi Chris,
Thanks a lot for your comment :o) Indee...Hi Chris,<br /><br />Thanks a lot for your comment :o) Indeed, the time-price opportunity array idea sounds interesting but it has the terrible problem of being impossible to simulate accurately due to the absence of reliable tick data on the Metatrader 4 platform. Since I only focus on strategies which can be accurately simulated that strategy seems to go out of my scope. However it could indeed be a good way of getting S&R levels and to gauge their importance.<br /><br />You are right in that the forex market likes to "play around" the S&R levels and they are rarely respected to the pip. Something which is often seen in stocks and futures. In forex we see more "zones" of S&R which are also often not repseted. <br /><br />However this lack of "respect" of the forex market is, in my opinion, a simple consequecen of the lack of a central exchange. Since in stocks and futures everybody sees the same charts, everybody has the same S&R levels in mind while in forex there can be a +/- 10 pip difference between what you are looking at and what I may be looking at as an S or R level. <br /><br />I am glad you have liked the post, I hope that you read tomorrow's post and give me your opinion regarding my ideas to handle the situation. Thanks again for commenting :o)<br /><br />Best Regards,<br /><br />Daniel FernandezDanielhttps://www.blogger.com/profile/00940108413648645894noreply@blogger.comtag:blogger.com,1999:blog-2847890102780597763.post-48393464002428091882010-03-18T08:49:52.197-07:002010-03-18T08:49:52.197-07:00Daniel-
That's a very interesting topic and i...Daniel-<br /><br />That's a very interesting topic and i've thought about it myself at times.<br /><br />One solution that comes to mind is to build an array of price levels and every time a tick arrives, increment the counter for that price level. What you end up with is an array of "TPO" time-price opportunity that resembles a "Market Profile" type graph.<br /><br />The array elements with the highest tick counts are where the majority of trading took place and could be considered either resistance or support depending on whether the price is above or below that level currently.<br /><br />Another interesting question is whether old resistance or support should "expire" after a given amount of time. If you wanted to do that, you could decrement from the array all price action X number of bars back in the past. I'm not sure if this makes sense since the older support/resistance is usually more important than newer support/resistance.<br /><br />One final thought - it seems like Forex has a devilish way of violating support and resistance much more than other markets, like stocks for example. I suspect that's because Forex is so heavily traded based on technical factors and they are fewer "buy and hold" type investors versus stocks.<br /><br />Anyway, good post and it will be interesting to see what you come up with.<br /><br />ChrisC. Smithhttps://www.blogger.com/profile/09412551371638188354noreply@blogger.com