FTSE Premarket Review 2012-11-19

FTSE looking bearish today, hitting the top of the bear flag shown.  I will look for opportunities to get short until the top of the bear flag is broken.

Decent area from 5980-90 to look to target if I can get a short on.

Alternatively the DAX is approaching the bottom of a bull channel, if this bounces we could see the FTSE break the flag and I will look for a retest of the top of the flag to get long.

Result

The market false broke the top of the flag and then tanked on bad news (google results i think).

Drawing Effective Support and Resistance

I thought I would jot down a few ideas I have regarding effective support and resistance levels on chart that seem to have worked for me.

Firstly a definition for anyone who has arrived here and is not familiar with support and resistance can be found over here.

• Strength is defined by the number of touches and the reaction off the level
• More recent swing levels are more relevant
• Important levels should be marked on higher time frames, weekly and daily work for me
• Beware of marking levels that price has previously not respected
• Bias the level relative to the current price, eg. if price is above the level it maybe possible to bias that level to when it has previously acted as resistance and vice versa when the price is below I try to bias the level to represent previous support.  This is because I like to trade breakout re-tests of these levels.
• Review levels on my charts once per week, remove any levels not being respected and tweak weekly and hourly levels