This is the perfect example of what you should avoid. There’s way too much levels and some are real, but not relevant enough.
The more contact with resistance level and support, the more relevant the Support/Resistance flip pivot is important.
It means there have been a lot of activity here, lots of fights to pass through this level, one way or another. This also means there’s a lot of people with position open in this price level area.
So how to draw these lines correctly ?
It’s very logic and simple, no need to search for complexity when there’s no reason to.
Start with high time frame levels, if any, start with the weekly or even monthly if relevant enough on historic past.
Draw the few most obvious level and then zoom into daily chart and repeat the same logic of drawing only the most obvious lines.
Lets draw it together on BTC (Binance spot chart)
We will use a color code to quickly identify what time frame is the level based on.
Weekly levels (yellow lines) :
Daily levels (teal lines) :
And you can stick to this as a pretty good start base.
This is landmarks for your future trades, a quick way to see where the market is, in the middle of nowhere, or working on a very long term Support / resistance line.
The zone in-between these lines, are high volatility zone, price zone where there’s not much public interest and open position.
This is where you can profit the most of your good positioning on these S/R levels. Both sides, Long or Short, the trade has a good Risk Reward ratio.
It’s worth taking a trade here, always managing your position size and secure your trade (can’t repeat that enough, it’s the hygiene of successful trader).
There’s a high chance that if level holds and act as a support, market will bounce the other way up in near term.
Same if level act as a resistance, high probability that market goes down soon or later and go all the way to retest the next important S/R level.
That’s why it’s very important to draw these lines properly, but not too much, only what is really relevant regarding long term history of the chart.
Trade these lines with pragmatic setup and your trading experience should be successful. It’s a long way anyway.
Low Time Frame Drawing
Of course you can do the same with Low Time Frame (LTF) charts.
We like to say that what is happening on HTF chart is also happening on LTF, just scaling difference. Some trader focus some trades on chart noise.
The smallest profitable range is what they try to catch.
But do it on a separate TA chart, so you don’t get too much lines and an unreadable chart. Always build a blank chart for daily scalp trading, for each session. That really helps to aviod over-bias mindset.
For such trading strategy, the time frame focus is very important, don’t forget about it, never get confused within too many different time frame chart monitoring. It just doesn’t works.
As you can see, all these zones are a potential trade.
But it’s better to focus on the worthiest ones, with biggest range and potential profit.