Why S and R works so good - Spring & Upthrust WyckoffWelcome Traders to a new Educational Posts.
Today we will have a deeper look at Support and Resistance. One of the most popular chart techniques out there, but the question?! Do they really work?
Absolutely YES. But probably not like most of the traders think they do. That simple Break and Retest Strategy. NOOO!
I would like to introduce you to the extended version of Support Resistance. The Wyckoff Spring and Upthrust.
Wyckoff Spring and Upthrust
In other words they are simply the Fake Outs at Support and Resistance Levels. The idea behind it is to get an entry exactly there where most of the trader will put their SL.
-> WHY?!
because of the LIQUIDITY
The whole market is based on Liquidity (Supply Demand). The bigger fish will always win. Those who have the bigger amount will always dominate here. Just FACTS . So how do you want to position yourself in the market. Exactly there were 95% of the Retail Traders will put there SL? Or do you want to change your perception on how you view the market.
This will completely change your view on the Forex Market.
Supply Demand
What I also do is I use my own style of Supply Demand to identify exactly those areas where most of the trader will put there SL and I will place exactly my Entry there with a very tight SL to get bigger Risk Reward. Of course I will not have that much of valid entries for my setups as they do not occur as often as Support Resistance Setups but the Total Risk Reward is a complete new Level. WHY?
Example Upthrust
Because you are rocking the market with the market movers. You are always clearing with these entries both sides.
#1 Sellers at Resistance because of Upthrust
#2 Breakout Trader(buy) because of Upthrust
Sell is the right decision in this case but most of the Traders will lose that Trade due to SL hit. Everybody is placing the Entry and SL different but the majority is losing this trade.
Spring Example
This was the bigger manipulation as the price did a strong move to the downside through the level of Support. This level was a very interesting level for Retail Traders to buy. Doji occured for Price Action Confirmation but the price dropped down to the level of Demand. Why? -> Liquidity. All SL were located there so Market Movers had there buy limit order placed exactly there.
Conclusion
With this Post I do not want to judge Retail Traders using Support Resistance. Maybe you found a nice Strategy with that and you are profitable. I am also using Support Resistance but simply in a different way as you can see. I just wanted to share with you my thoughts behind Support Resistance and how I use them to be profitable
Please leave a LIKE if you found this Post useful and share your thoughts below!
