Transcription
Drawing the right support and resistance zones is literally the most important part of day trading, and 90% of people fail measurably at it. So, in this video, I'm going to show you exactly how to find and draw perfect support and resistance zones so that you can stop drawing incorrect zones, incorrect support, or resistance zones that are causing you to lose multiple trades and stay an unprofitable trader. So, if you're excited for this video and ready to start learning, smash the like button, and let's hop right into this.
All right, so boom, let me break down exactly what support and resistance is, really quickly, before I show you guys exactly how to find it. So, in short and in simple terms, support is just a floor, resistance is just a basically roof, right? And what I mean by that is, usually, if price comes down to a box, let's say this is our box right here, and we see price went up, we'd assume that when price comes back down to that same area, that it's also going to go up. And that allows us as traders to capitalize on that and be able to buy off of the support zones and sell off of resistance zones. Support is always on the bottom, resistance is always on the top.
Now, it doesn't have support and resistance doesn't have to happen when there's so many touches on the resistance or the support zone. It could also happen like this example right here, where we see we had a huge push to the upside, then price came to a specific point and had a huge drop off. Even though this is only one touch at that resistance zone, it's a huge sell at this point. So, likely, when price comes back into that same point where price sold off extremely heavily, we know it's a high chance that it'll sell off of that same exact point. So, we would wait for it to come back into that resistance area and be able to capitalize on it dropping down.
Now, there are other things that happen when support and resistance zones actually get broken. And what I mean by that is, this resistance zone right here, we see price is going up, down, up, down, up, down, then it came and finally broke above this resistance zone. And most of the time, price comes back down to retest that previous resistance zone and it ends up using it as a support zone and bounces off of it. Vice versa with support zones. So, when price finally breaks through the support zone, like it did right here, most of the times it comes back up to that previous support zone and ends up treating it as if it's a resistance zone and sells off of that. So, that is a huge key to remember.
But now that you fully understand exactly what support and resistance is, let me show you guys real-life examples on the charts of how you actually find perfect zones on candlesticks and also how you draw boxes to make sure that you're not missing anything and you're also not getting false signals that this could be a fake support or resistance zone, and that would allow you to lose a lot of money.
All right, so boom, here we are on a Natural Gas chart, NG, which is literally my favorite pair to trade, especially with support and resistance, because support and resistance works freaking amazing on Natural Gas. If you do trade this pair, if you don't trade this pair, look into it. Literally, in the past 10 days, we have not lost a single trade inside of my inner circle. If you guys did not know, I have an inner circle. I send out all of my trades. You also get access to me personally. I'll teach you how to trade exactly how I trade. You'll get access to all the other coaches in there as well and all their trades. If you guys want to sign up for that, it's a link for inside description down below. But basically, in the past 10 days, support and resistance has not failed me once with this, this strategy or with this pair, um, called Natural Gas. So, I'm going to be using this as our example.
As you see here, we have boxes already drawn. Right now, I'm on Heikin Ashi candlesticks. I highly suggest for you guys to use or try Heikin Ashi candlesticks at least to just draw your support and resistance zones, because Heikin Ashi candlesticks literally just makes it so much easier to find and spot support and resistance zones versus regular Japanese candlesticks. Obviously, you can use regular Japanese candlesticks if you want. I just personally find it way easier and simpler to come over here on TradingView and go down to Heikin Ashi candlesticks. It just makes it so much simpler to find support or resistance zones. Then, obviously, if you want to switch back to regular candlesticks after you have all your zones drawn out, you can. But for this example, I'm going to be using Heikin Ashi candlesticks because it's so simple and so easy. I suggest you guys try it out.
But as you see, it's the same example how I had drawn up before. We have a floor right here. Let me turn off my indicator right here, actually. Um, we have a floor right here. So, we have price came down to this point and went up. Price came down to that point again and went up. Price went all the way up here, came back down into that same support zone that we had previously and went up. Price came down to that same support zone previously that, uh, we had, and it went up a little bit before breaking through it, right? So, literally, this is a perfect, perfect, perfect example of what I mean by support, right? It's the clean support zone, multiple rejections off of it. This is where we would have drawn our support zone when it first touched it. That was a horrible circle. This is where we would have drawn our support zone when we first touched it. We could have entered the trade right here. Could have entered a trade right here. We also potentially could have entered a trade right here to catch a small move to the upside. This is a support zone.
Now, a resistance zone would look like something like this. Let's go down to the 5-minute time frame so you can see it a little bit clearer. So, we would have seen our rejection here. This is one huge rejection to the downside here. So, we would have drawn our resistance zone box right here because of this. It would have came up into our zone again right here. We would have been able to catch this whole sell to the downside. Again, it came up into our box, and we would have been able to catch a whole move to the downside again. So, this is a perfect example of a resistance zone.
Right now, I told you guys before, a lot of times support zones will turn into resistance zones, and resistance zones will turn into support zones. Now, let me show you a perfect example of that. So, here we also have a support zone. We see we have multiple touches right here and rejections. A touch right here, rejections, a touch right here, and it went to the upside perfectly, right? I'm tired of seeing these green lines, anyways. So, we have this support zone right here, beautifully. Then we see price came, respected it again right here, came, respected it again right here. Keep in mind, with support and resistance zones, it can sometimes go through it a little bit, then go back up. So, you want to be aware of that when you're trading support and resistance. But it doesn't happen very, like, very often at all with Natural Gas. But other pairs that are high, more high volume, like NAS 100 or, uh, US30 or YM or NQ, whatever it is, um, it'll happen a little bit more frequently.
But anyways, we have our support zone here. We see it finally actually broke it to the downside. And if we go a little bit longer, go a little bit further, go a couple days later, we say it came back up to retest that previous support zone that we had and used it as resistance zone and sold off of it. So, we could have potentially caught this whole sell to the downside using that break and retest setup that I showed you guys on the drawing examples. So, these are right here are real-life examples of everything I just showed you guys. We have our support zone, we have our resistance zones, and we also have a break and retest setup right here that I just talked about.
Now, how the heck do you find these zones? How do you know when one is a legit zone? How do you know when is a bad zone? How do you draw your zones? Like, how big should your boxes be? I'm going to answer all that right now because that's where a lot of people get messed up, and that's where a lot of people get confused and end up drawing the wrong zones.
So, first of all, for me personally, I like to draw my zones on either the 15-minute time frame or the 1-hour time frame. You guys have to understand, the higher the time frame, the less price lies. And what I mean by that is, a 1-minute, if you go on the 1-minute chart and draw support and resistance zones, those zones are not going to be as respected as if you go on the 1-hour chart and draw support and resistance zones. So, the higher the time frame, the more powerful your support and resistance zones are going to be. I find a calm medium between the 15-minute time frame and the 1-hour for drawing my zones. I will not draw support or resistance zones on the 5-minute time frame or the 1-minute time frame because those are not strong enough. Sometimes price will go to those areas and not respect it. I like my zones to be respected, right?
So, let's say we're on the 1-hour time frame. How I like to draw my resistance or support zones is when I'm on Heikin Ashi candlesticks. Let's delete this. Um, when I'm on Heikin Ashi candlesticks, I like to take a box and on the lowest candlestick or the highest, depending if I'm drawing a support or resistance zone, on the lowest candlestick, I'll draw from the body of that candlestick all the way down to the wick of that candlestick. So, literally like this. So, we see the body is where my box starts, and the wick is where my box ends. And I'll just drag it along. That's exactly how I draw my zones. And as you see, we could have caught this beautiful buy to the upside. That's how I draw my zones.
Now, how do I spot my perfect zones? So, there are two different ways that I like to do this, right? My favorite way is what I like to call change of direction zones. These are my A++ setups. This is where I'll risk thousands and thousands of dollars on every single trade that you guys probably see me on my Instagram or YouTube and stuff like that. When I see these zones, these are the ones that I'm extremely confident about. And basically, all they change of direction zone is, is basically when price goes, is in an uptrend, let's say for example, something like this. Price is in an uptrend, and then it gets to an area and it starts going into a downtrend, right? Let me finish drawing this out, actually. Boom.
So, so my change of direction zone is simply a zone where price ended up changing directions. So, what I mean by that is, it is, we see we're in an uptrend right here, then price got to this point right here and went into a downtrend. So, now I'll draw my box around that highest point that it went before switching the directions and I'll drag that along because most of the time, when price comes back into that change of direction zone, it gives me a beautiful rejection off of that where I can catch a very, very large trade and end up making a great, great amount of money. Now, keep in mind, these change of direction zones do not happen all the time. They happen maybe two or three times a week, but two or three times a week is really all you need if you can maximize and only trade those A++ setups. Something like this.
Now, keep in mind, it also works with resistance. I mean, support. So, we see how we were in an uptrend here, then we went into a downtrend, and then we got to this point down here on my example and we went back into an uptrend. So, then this would also be a change of direction zone for me, right? Now, what does that look like on the real chart? This right here is a change of direction zone. We were in a downtrend right here. We created one change of direction zone right here because this is the lowest point it went before it went back into an uptrend. And then we were in an uptrend. It got to this point right here, and then it went into a downtrend. So, now I have two change of direction zones that I'm waiting for. I know, and keep in mind, this probably happened next week. I know if NG comes back down into this zone right here, I'll be able to catch a beautiful buy to the upside. Vice versa, if NG comes up here, Natural Gas comes up here into this change direction zone, I know I'll be able to catch a beautiful sell to the downside because these are extremely strong support and resistance zones because they are also change of direction zones.
Now, I told you guys it was two different types that I look for. That is number one, change of direction zones. Those will always be my favorite. Now, the next thing that I would look for would be something literally like this, where we have one floor, one part where we see price came up, then it came down, and we see a huge rejection off of it. This is a huge rejection to the upside. I would have drawn my box right here, waited for price to come back down, as it did right here, and then I'd be able to buy off of this zone right here. So, I'm looking for zones where price comes down into an area and has a huge rejection off of it. I'm drawing my box exactly how I showed you guys, from the body to the wick, and then I'm waiting for price to come back down into that zone and I'm catching buys off of that zone. Now, vice versa with sells, right? The same thing could happen. I see price made a huge push to the upside here and had a huge sell off to the downside here. So, I draw my zone from the body to the wick. I'd wait for price to come back up into it, which we see it did right here, and I'd be able to catch a sell off of that. That simple.
So, I'm waiting for either change of direction zones or I'm waiting for huge rejections at one area, whether it's a buy or sell, huge rejections at one area. I'm drawing my box at that zone and I'm waiting for price to come back into that. Now, a third one that I use sometimes, it's not my favorite one to use, but it's if I see multiple smaller rejections at a zone. And what I mean by that is something like this, where we have multiple rejections at one point. They're not huge moves off of it, but I know if price has rejected it, this is all consolidation right here, but this is one rejection to me. This is two rejections, and this is three rejections. So, if I see two, if I see two or three smaller rejections, then I'd be okay with if it comes back down into that area, which it did right here. I'd be okay with hopping in buys right here because I saw three smaller rejections. Even though they're not huge rejections, I saw three small rejections off of a same point or same zone, which shows me that potentially I could catch buys off that area and I'd be perfectly fine doing that. Now, like I said, that's not one of my favorite things to do, but it is also a form of support and resistance.
And then obviously, as I was, as I was explaining to you guys, you can take break and retest of the zone. So, the same zones that you have drawn out for your support or resistance zones, don't feel upset or bad if it ends up breaking through it and not respecting your zones, as it did right here. It broke through it because, remember, support zones often times end up turning into resistance zones, and you can use that same exact zone to then catch sells off of if it's a break of a support zone. You can catch sells off. I'm trying to move my stop loss. You can catch sells off that same zone. Or vice versa for buys. Let's say, for example, this right here, where we have one rejection right here. So, we draw a resistance zone right here from the top of the body to the wick, drag it across. We see price broke above it right here, came back down to retest that previous resistance zone and bought up. So, that's also extremely valuable zone here.
When we're trading support and resistance, be sure to leave your previous support and resistance zones, even though it got broken through, because price will most likely come back down to retest those support or resistance zones and end up treating it as the opposite. Opposite, as in this was previously a resistance, now it turned into a support. And our example before, it was previously a support, then it turned into a resistance.
Hopefully, this video was able to help you understand, find, and draw perfect support and resistance zones so that you can stop drawing wrong ones that are causing you to lose trades because they're not the right support and resistance zones. That is the entire purpose of this video. Like I said, 90% of traders fail miserably at drawing their zones, and they're very confused why they keep losing trades, and it's really ultimately because they don't know how to draw the right zones. They're just drawing random boxes that are not actual support and resistance zones, and it's causing them to lose. So, after this, what, after watching this video, you should understand exactly how to draw the right zones and you should stop drawing the wrong zones.
But if you found value in this video, I'd appreciate if you smash the freaking like button. I'm always trying to just provide as much value as possible to the trading community because I know in the beginning of my trading, there were so many questions I had, so many problems that I faced in trading, and I want to be the person that I wish I had back then in my trading. Speaking of being the person that I wish I had back in my trading, if you guys want to get access to all of my trades, get access to me personally, I'll handhold you through your entire trading process. You get access to all my courses. I'm live every single morning doing market breakdowns and trading live with you guys, um, inside of my inner circle. If all that sounds amazing to you, click the link down below to apply to get inside my inner circle and get access to literally all my trades. I told you all, we went 10 for, well, we went 10 days straight without losing the past week inside the inner circle with Natural Gas. Um, but yeah, click that link down below to join the Inner Circle.
But if you guys enjoyed this video, I know you guys will enjoy this video right here. I go through the exact strategy that I used to go the past 10 days without losing a single trade on Natural Gas. So, I'll see you guys in this video.