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🧵 Thread on what i use when analyzing the market:🧵📝✏️
- To start i try to limit indicators to a bare minimum. Price is king and indicators for the most part clog the mind and most are lagging.
-For support and resistance I use a combination of Channels, pattern formations (triangles, flags etc) and horizontal pivots.
-I do use fibonacci, sometimes as an actual s/r but most times just to gauge retracements. To see if we are in a "normal" pullback.
-And as far as actual "indicators" i use the rsi, 50,100,200 MAs, and short term 8 and 21emas.
-When drawing channels most people anchor at the extremes i.e to major swing highs on one side and two major swing lows on the other side. While this is the correct way alot of the time, there are many times it isn't because the second swing high might just be a deviation. (More on this later).
-The way i derive my pivot levels is multifaceted. I typically start on the yearly chart and see if there are any yealy lows or highs of note, they usually act as a support or resistance. Next are key monthly pivots, highs or lows of important months. How do i deem it important? Well again that requires a longer thread but for starters i want that level to have generated a strong market reaction in the past. If theres an open and or close on back to back monthly candles at the same price to me that is a powerful level. When i zoom lower down to daily levels to me deviations are everything. Remember all deviations are liquidity grabs BELOW or ABOVE the "actual" level, so its important to try to identify whats the s/r level and whats the deviation point.
-As far as fibs are concerned depending on the time frame of the fib i might actually trade it but typically i use it just for measuring purposes.
-The 8 and 21 emas are super powerful particularly in TRENDING markets like weve had the last 2 months. So many tickers simply have rode the 8 ema while some have rode the 21ema. I use it to gauge trend, u can use it as an s/r as well.
-The higher timeframe moving averages are basically useless on a day to day basis unless we are actually testing them mid day but they can also be used to gauge strength and trend from a much higher timeframe.
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