November 18, 2009 http://www.forexfactory.com/showthread.php?p=3241449#post3241449 I am receiving a few emails everyday re. how to draw SR lines. Although this issue has been addressed several times in detail, I'd like to share my way of drawing SR lines once again. And I'll show you how to do it step-by-step. Due to Donadoney's NZDUSD practice, I'll do the same. First of all, open a Big Boss line chart and put horizontal lines where you think the levels are important (preferably tested a few times). This is how my chart looks like after completing this exercise. Then switch to candlesticks and compare both with respect to the lines you draw. I have also attached this. Did you all see 0.71 SR level where it was drawn originally from line chart due to 1996, 2005 and 2007 swings/tests but more importantly look at Feb 2004 shooting star where price reversed from 0.7099. Isn't that beautiful? That's why I am also using lows and highs of certain candles.
Attached Thumbnails
I have 9 major SR levels on my completed
NZDUSD chart and we already drew 6 of them from Big Boss. Then all you
have to do is to keep them on your chart and switch to Boss chart to
draw additional major SR lines which may not be seen on Big Boss and to
fine tune the ones already drawn from big Boss, if needed, based on
Boss opens/closes and high/low of certain bars (by doing this, actually
I am doing what Donadoney described).
Attached are how both charts look like after switching to Boss chart. Everything looks OK except a fine tune may be needed at all time high and we also need to check 0.5650 SR due to 2008-2009 moves where we see too many violations (not respected). If it is so on Worker, too, then we may downgrade it.
Attached Thumbnails
And this is how both charts look like after adding SR lines from Boss chart and fine tuning the ones from Big Boss chart.
I have added 0.6450, 0.6700 and 0.7500 SRs which were not that obvious on Big Boss chart and fine tuned 0.8000 SR to 0.8150. I still couldn't decide about 0.5650 SR so will check it on Worker. Blue SRs are the additions.
Attached Thumbnails
After checking Worker with all SRs
drawn, I start grading them. For NZDUSD, I accept all of them as major
SRs except 0.5650 where this SR was not respected in 2008 and 2009 as
much as I like, therefore I have downgraded it by changing line
thickness.
I have also attached zoomed-in view of that area for 2008-2009 for you to understand what I mean by "not respected".
Attached Thumbnails
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