By Karthik Subramanian
Many of the top traders in the world trade using what is known as price action. By price action, we simply refer to how the price reacts and behaves at any specific point of time. The traders will also tell you to watch how price behaves at points of support and resistance. There are various ways of finding the points of support and resistance like fibs, murray lines, historical prices etc.
The above few sentences contain a whole lot of terms which new traders might find difficult to understand. Over the next few days, I will be writing a series of articles to explain each of the terms above and I will also be posting current charts of different pairs to highlight possible trades.
Let me first start with murray lines. Murray Maths is a very complicated technique involving complex calculations. It involves dividing price and time into octaves and coming up with supports and resistances based on that. Thankfully for us, we need not understand what goes on behind the scenes and we need not know how it is calculated. We have a very good MM level indicator (freely available on the net) which draws the MM levels for us.
It draws the levels by choosing the highs and lows of the current chart and diving that into octaves. Since the indicator chooses the current chart, the MM levels vary according to the time frame of the chart. Of course, the MM levels in chart of higher TFs are much stronger SR than those on smaller TFs.
Attached is a current 1H chart of GBPUSD and you can easily see how the murray lines show you the regions of support & resistance (SR) so easily and explicitly.
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