HOW TO use CK Support Resistance
The CK Support Resistance script tracks both supports and resistances based on yield distributions instead of price. This allow us to know a probable support or resistance when it is first touched, not when it is retested a second time.
Purple and magenta lines are found during bearish movements, while light blue and blue lines are found during bullish movements; on the other hand, dark colors like blue and purple indicate resistances; light colors such as magenta and light blue indicate supports.
How to use this indicator?
There are several cases where CK Support Resistance can help the trader. we analyze a few in this idea to show how this indicator can be used.
1.
Trade with CK Support Resistance according to price pattern.
In this case we can see a double bottom that finds the second bounce right above the support. As soon as you notice the pattern's development it is possible to open a long trade; in this case we can spot two target zones, simply signaled by pre-existing resistances in accordance with the trade executed.
2.
Trade with CK Support Resistance according to a single candlestick.
In this case we can see different resistances in the upper part of the chart (above the short signal), meanwhile we can see an area below where they are not present.
You are therefore more likely to find large movements towards the area without any drawn lines. On these occasions it is possible to use a single candle to enter, if there is a clear reversal candle.
Furthermore, we can see two new resistances that have been drawn following the trade; the price has remained immediately below these new resistances, which is a confirmation of the bearish trend.
Finally, we're able to see the pre-existing support for the trade: this provides the first target zone in order to take profits.
3.
Here you can trade again with CK Support Resistance according to a single candlestick.
In this case we can see a long reversal candle on a support. It is an excellent long opportunity as there are no pre-existing resistances in the upper area, there is plenty of room for an uptrend!
A new support is drawn which immediately acts as a confirmation of the trend, ending up in the 3236 area where you could see the first signs of a weakness in the trend, identified by a previous rebound on the resistance level.
4.
If we can see many close levels of support / resistance - and especially if they're of the same color - it is likely that we are in the local top / bottom. In this case there were many close supports, all found during bearish moves, so we were able to look for long positions. Furthermore, it is possible to try to take advantage of range zones, if we notice that the price gets trapped bouncing between the traced supports and resistances.
A series of long confirmations also followed, as new supports were drawn and immediately were tested on the upside.
Finally, we notice a double top pattern at the resistance level (blue) plotted at the top of the chart, which give us the input to exit long positions and look for short opportunities.
5.
Following up the last outlined pattern, here we can see a lot of resistances (blue) found after a bullish move in a narrow price range: in this case we should start looking for short opportunities, as we know we are in a probable local top of the market.
Purple and magenta lines are found during bearish movements, while light blue and blue lines are found during bullish movements; on the other hand, dark colors like blue and purple indicate resistances; light colors such as magenta and light blue indicate supports.
How to use this indicator?
There are several cases where CK Support Resistance can help the trader. we analyze a few in this idea to show how this indicator can be used.
1.
Trade with CK Support Resistance according to price pattern.
In this case we can see a double bottom that finds the second bounce right above the support. As soon as you notice the pattern's development it is possible to open a long trade; in this case we can spot two target zones, simply signaled by pre-existing resistances in accordance with the trade executed.
2.
Trade with CK Support Resistance according to a single candlestick.
In this case we can see different resistances in the upper part of the chart (above the short signal), meanwhile we can see an area below where they are not present.
You are therefore more likely to find large movements towards the area without any drawn lines. On these occasions it is possible to use a single candle to enter, if there is a clear reversal candle.
Furthermore, we can see two new resistances that have been drawn following the trade; the price has remained immediately below these new resistances, which is a confirmation of the bearish trend.
Finally, we're able to see the pre-existing support for the trade: this provides the first target zone in order to take profits.
3.
Here you can trade again with CK Support Resistance according to a single candlestick.
In this case we can see a long reversal candle on a support. It is an excellent long opportunity as there are no pre-existing resistances in the upper area, there is plenty of room for an uptrend!
A new support is drawn which immediately acts as a confirmation of the trend, ending up in the 3236 area where you could see the first signs of a weakness in the trend, identified by a previous rebound on the resistance level.
4.
If we can see many close levels of support / resistance - and especially if they're of the same color - it is likely that we are in the local top / bottom. In this case there were many close supports, all found during bearish moves, so we were able to look for long positions. Furthermore, it is possible to try to take advantage of range zones, if we notice that the price gets trapped bouncing between the traced supports and resistances.
A series of long confirmations also followed, as new supports were drawn and immediately were tested on the upside.
Finally, we notice a double top pattern at the resistance level (blue) plotted at the top of the chart, which give us the input to exit long positions and look for short opportunities.
5.
Following up the last outlined pattern, here we can see a lot of resistances (blue) found after a bullish move in a narrow price range: in this case we should start looking for short opportunities, as we know we are in a probable local top of the market.
