“History doesn’t repeat itself, but it does rhyme.” -Mark Twain
Key Levels define the patterned rhyming of previous price action and can be used to define parameters for future trades. Price action will often bounce off or breaks through Key Levels and this is why traders use them to identify Entry, Stop Loss & Profit Targets and avoid trading in “No Mans land” where price action has no real significance.
Resistance and Support
How to draw key levels
Drill down to lower time frames (in this case Daily) to identify potential Entry points.
- Key Level Parameters are an excellent method for cancelling out “market noise”
- This exercise is designed to teach you how to read the market for yourself, for the best trades cross-reference your results with a pivot table and current Broker Commentary
- Stop Losses should be placed behind Key Levels, Profit Targets should be placed on Key Levels