Support and Resistance: The First and Best Setup I Learned

Hey guys, a couple of things today. One, I had someone ask me if they're doing something like a top step combine, like you're trying to get funded, whether to trade the Q futures or the spy futures. My take on it is that for most people, especially if you're just beginning and you're not a seasoned trader, the spy futures are better as long as the market is moving, which it is right now. It has been for, for a while now, uh, probably since at least since Trump took office and the reason I say the market has to be moving, if we get into a dead spot in the summertime and the market's not moving, then spy can become more difficult because it just doesn't move as much. And as a trader, you have to have movement, right? Volatility as a trader is good without it. You're dead in the water and can't make any money. So spy is easier because it moves more smoothly and you have less chance of getting stopped out. So again, I suggest to someone new, if they asked me, I would do spy futures first and then Q futures as you get a little more experience with both of them. You have to have money management, just like in any other trading endeavor. It's just a little bit more difficult with cues, which means you have to be on top of it a little bit more than what spy when you're setting stops and taking profit, things like that. So the other thing is I wanted to show you on spy, how you can use the very first thing that I learned in trading 30 years ago now support resistance. If you are afraid of, or don't use and don't know how to use technical indicators like the 20 or VWAP or RSI or anything else, you can still trade off of price, right? That's what most of the technical indicators are based on. Anyhow, is price and or volume. So you can use only price, especially when you have a market that's trading generally sideways, which we've been doing now for several weeks. I have a bias a little bit to the upside now, but in a market that's up and down intraday, which we have been a lot again over the past few weeks in a market like this, you can trade using price and you're basically using double tops, double bottoms oversold overbought reversal signals because we've been reversing again, intraday over and over reversing off a bottom and reversing off the top. It's been working both ways. So here on spy, this was just a couple of days ago. We opened up higher. We had a quick sell down and then a quick reversal on a reversal like this with a bottoming tail. I took this trade with a bottoming tail and the reason it's a bottoming tail is because this candlestick formed in a two minute timeframe and sellers try to push the price lower, but it rebounded right within that two minute timeframe. So you've got a quick snapback because it's again happening in a short timeframe and you've got this long tail here. The buy point is as you clear this large red candle, this last red candle. That is to me, that's a hairpin turn. The market's going rapidly, has to slow down just like an F1 car and a hairpin turn, and then moves back up. That's your buy point right there. As you clear that red candle, you can be a little more aggressive and buy as you move through 50% of the red candle, but the real buy trigger is here. As you clear that red candle, it's also called a bullish engulfing pattern. Here you have a double top, right? It's just price, like nothing's on here. I'll put the technical, the technical indicators on in just a second, but you can see double top, we go almost to the exact same price here. The high was 597.78 here. The high was 597.86, right? It's 6, 6, 7 cents a difference in these two. And they're short as you break through this support, right? Support was here on this one. Support's here on this one. Support and resistance, right? You don't have to use the technical indicators that are on the, on the chart, if you don't want to, and you don't know exactly how to use them. Short here, move on throughout the day, you get a double bottom here. This is actually, let me zoom, I'll zoom in now on this. This is actually what's called a tweezer bottom. See how these two look like a pair of tweezers because they come to almost the exact same low, that's a tweezer bottom. You get a bounce, a pullback. We don't go as low as we did in the tweezer bottom, and now you've got a double bottom. Your buy point is as you clear this resistance. If you miss this, you have a second buy point, and this is where I do like to use the 20. You know, as you guys know, this is your second buy point. Now you have like, if this is a little bit aggressive, this, now that you're above the 20, I'm going to pull it back down, you're now above the 20, but you're still close to the 20. So a power bar that originates, it's important where it comes from. At the 20, then you get a high base forming here. You break through this resistance that is at the top of this base, that's your buy trigger. And then you get a move higher. Again, over and over in this market, we're getting tops and bottoms, right? Throughout the day, we get another top and look where it forms, right? Just a tiny bit above this top. So basically now you have a triple top and you can see what happened when we rolled down from there. And I can put in now, I'll put VWAP on to this day. So you can see how we traded with that. So you can see with VWAP here, the white line, two standard deviations away. We traded down through this standard deviation line. And I have said before, you have to be careful, you know, early in the day, because if the market is compressed, then your standard deviation is not going to be far away. So this standard deviation doesn't really help that much near the beginning of the day, but we get oversold with this bottoming tail. And now you have basically a standard deviation and you can see how it matches up with price and with the bottoms here, but close to the standard deviation to the upside here, back to VWAP down to two standard deviations away, back to VWAP and a continue move higher. So this can help again, to give you an area on the chart to look for setups. But if you don't want it, if you think it's busy, if you don't understand VWAP, then just trade price action, right? Just trade support and resistance. Again, the first thing I learned, you know, 30 years ago, supporting resistance. And I still think one of the most important things you can possibly learn and use in your trading support and resistance, regardless of the technicals. When I started, we didn't have charts that did this. We were doing point and figure charts, you know, hand drawing charts and classes that we had so you could see where support and resistance was forming. So this is just an old standby tool and it works today, just like it worked back then. I hope that helps. If it did, please hit like and subscribe and I'll continue to make videos like this. Thanks.