We all know that Break of support leads to a drastic fall and break of resistance leads to a sharp rise in price. But most of the times when we try to trade it on higher timeframes, price has already gone up or down increasing using your Risk. Then, what time frame is best to trade Daily supports and resistances?
In todays fast paced algo trading generation, you should be able to spot the entry on a lower timeframe to gain higher edge. At the same time, you must also take care of risk while entering in lower timeframe.
Summing it up, we will mark supports and resistances on higher time frames and enter it in lower time frame. It’s up to you to trade it intraday or positional.
One such support and resistance system is “Inside Candle Setup”. An inside bar is formed when one complete candle is inside its prior candle.
Above two images are examples of “Inside Candle”. The second candle is completely inside the first candle. When the high of first candle gets broken, it is considered as bullish and bearish if the first candle’s low gets broken.
Bearish Setup : A retest and break of first candle’s low of inside candle setup in intraday session will lead to a bearish rally
Bullish Setup : A retest and break of first candle’s high of inside candle setup in intraday session will lead to a bullish rally
As seen in the above two images, an inside candle appeared on Sep 16 2019. On Sep 17 2019 in intraday session, a retest of the support happened and a 5 minute candle broke the support. After that the index fell until 10800 later that day.
As seen in the above two images, on 17 Aug 2018, inside candle setup was seen. On 20 Aug 2018, in intraday session retest of resistance happened and when a 5 minute candle broke the resistance stock rallied up to 1236 from 1216 later on that day.