The Wash and Rinse To See True Support/Resistance

True support and resistance are found in the meat of the move, not at the extreme highs and lows. To find it, simply draw a zone or box, look for the place that price touches the most, and then pay attention to what happens afterward.

In this lesson, I show how a Wash and Rinse structure at the pivot of a swing uses the most touches to find true support in a market.

The Wash and Rinse have a process that we can follow in real-time.

1. Multi-Pivot Line (MPL)
2. Zoom through the MPL
3. Come back and retest the MPL
4. Zoom back through the MPL the other way

What happens in this process, is that buyers are holding some level. Price then busts that level triggering stops and at the same time encouraging shorts to enter. Then the price rips back up essentially cleaning the book of orders and showing where the true support is (at least for the time being).

Once you recognize this structure, you can begin making your own observations and use these levels to read a market or build a setup around it. The most important part is to learn to design a plan with objective rules around what you observe.

Shane

Learning Price Action Through Observation

Learning Happens when you’re open and curious and making observations from what you see. From there, you must be mentally balanced to take action on your observations.

In this post, I focus on the price action that happens in the pivot portion of a swing cycle. If you make observations of this area you will see a certain kind of repeating behavior that can help you understand and design methods for trading swings. You will notice that the market likes to wash everybody out of their positions before pivoting to continue its swing.

I look at two ways this shows up in the price action of a pivot. The first is an engulfing bar that expands and swallows at least 3 of the previous bars. The second is a Gap Swap where a WRB Gap will make an effort in one direction just to be followed by another WRB GAP that reverses that effort and direction and shows that the balance of power has shifted.

This is just a small part of what makes up a swing but it factors into my overall methods and trade plan. You can make observations yourself on pivots and see what you can learn.

Shane

The Gap Between What Is and What Will Be

There are 5 basic ways to trade a Gap or any line. In this video, I discuss two ways to enter the market using a Gap. The Gap entry techniques by themselves are of little use, but if we make a few distinctions in market structure and the process of a swing cycle, they can become functional.

Swing cycles have a process that they go through. As long as we understand that process we can view Gaps in the light of where they happen in that process. I’m going to focus on these two Gap entry techniques in the lower portion of the reaction leg at the bottom pivot of a swing. The Gaps are what make up the pivot portion of the swing.

If you observe markets and swings you will often see this distinct pivot portion of a swing, it looks like a U at the bottom of a reaction leg.