I am quite sure that I am about to offend legions of e-mini traders, and it won't be the first time. It's my opinion that if you draw enough lines on a chart the price is going to stop on one; the question is, of course, on which line will the price stop?
That very question is the one that puts me at odds with theoretical support and resistance points on a chart. Really, just tell me on which line the price action is going stop on a given e-mini chart and will be happy to convert to your Fibonacci system. On the other hand, I have traded with dozens of dyed-in-wool Fib traders and I drive them absolutely crazy.
I keep asking aloud "is it going to stop on this line?" It is impossible to know exactly which fib line on which the price action is going to stop. Eventually I throw my hands up in desperation and frustration. If you draw me 6 lines on chart and inform me that price is going to stop on one of those lines, I can't help but think that it might be useful to have some vague idea which line is going to hit pay dirt. That being said, I often get charts after the trading is over showing where the market price stopped on the 61.8% line: my usual answer is that it would have been helpful to have that information during the trade.
Pivot points drive me even crazier. There are days when the market may pay attention to several of the pivots on an e-mini chart. The next day, however, you may have well drawn in the lines with an etch-a-sketch. In short, the market has days, and more than just few, when pivots points of any description are simply adornment on your chart.
On the other hand, if you carefully find areas of developed support/resistance on a chart you really have something to trade, especially when you combine volume in the equation. Since e-mini trading is a zero-sum game, it is not unusual to see volume build on a past support and resistance. Obviously, higher volume generally indicates some traders exiting their positions and new traders entering the market in the opposite direction. Holy Cow! Instead of relying on hocus-pocus trading, you actually have some very real points on the charts that can be verified with some level of accuracy.
In summary, I am encouraging you, as a trader, to rely on more empirical chart analysis and avoid the "projected" points of Fibonacci and pivot points. Having verifiable support and resistance points on a chart and using volume, which is just one of several methods to verify support penetration or stall, is a far more accurate way to trade.
That very question is the one that puts me at odds with theoretical support and resistance points on a chart. Really, just tell me on which line the price action is going stop on a given e-mini chart and will be happy to convert to your Fibonacci system. On the other hand, I have traded with dozens of dyed-in-wool Fib traders and I drive them absolutely crazy.
I keep asking aloud "is it going to stop on this line?" It is impossible to know exactly which fib line on which the price action is going to stop. Eventually I throw my hands up in desperation and frustration. If you draw me 6 lines on chart and inform me that price is going to stop on one of those lines, I can't help but think that it might be useful to have some vague idea which line is going to hit pay dirt. That being said, I often get charts after the trading is over showing where the market price stopped on the 61.8% line: my usual answer is that it would have been helpful to have that information during the trade.
Pivot points drive me even crazier. There are days when the market may pay attention to several of the pivots on an e-mini chart. The next day, however, you may have well drawn in the lines with an etch-a-sketch. In short, the market has days, and more than just few, when pivots points of any description are simply adornment on your chart.
On the other hand, if you carefully find areas of developed support/resistance on a chart you really have something to trade, especially when you combine volume in the equation. Since e-mini trading is a zero-sum game, it is not unusual to see volume build on a past support and resistance. Obviously, higher volume generally indicates some traders exiting their positions and new traders entering the market in the opposite direction. Holy Cow! Instead of relying on hocus-pocus trading, you actually have some very real points on the charts that can be verified with some level of accuracy.
In summary, I am encouraging you, as a trader, to rely on more empirical chart analysis and avoid the "projected" points of Fibonacci and pivot points. Having verifiable support and resistance points on a chart and using volume, which is just one of several methods to verify support penetration or stall, is a far more accurate way to trade.
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