Utilizing Support and Resistance Combined with Wave Pattern Recognition.

Author and Chief Market Analyst with over 13+ years in the market shares how she utilizes technicals to tackle the markets.

Anne-Marie Baiynd is the CEO of TheTradingBook.com and its Chief Market Analyst. Trading since 2005, Anne-Marie has been using the simple concepts of support and resistance, combined with wave formations to create trading strategies that deliver results in many market environments and across all instruments. Her focus remains support and resistance and wave pattern recognition. Anne-Marie is a regular contributor to Yahoo! Finance and SeeItMarket. Her books, The Trading Book, and its companion workbook The Trading Book Workbook, continue to sell robustly for McGraw-Hill. What follows is a recap of the Q&A. For the full transcript please GO HERE.

When do you take action after support/resistance is broken? — yoways

S/R levels fall with a pattern formation. If bullish & resistance breaks, I’ll wait for a retest of my breakout level with an order. The same technique can be used in reverse.

Can you tell us more about wave patterns and how you integrate them with S/R any recent examples? — michaelbozzello

Tough to answer in short, but waves are motions of buying/selling pressure. How big or shallow waves are define the motion. Note the chart: Our wave ranges will define regions of importance that often become relative support and resistance.

Do you think $GRPN will get a good buy out offer? — uknatty

Don’t often look at these sorts of arbitrage events. I tend to engage after the fact. Would love to say more, but not my scope

What’s your definition of a support or resistance level? — RiskAndRun

Excellent question and one lots argue about. To me, it’s about where decisions get made -take a look at my $AAPL notes. It is the fact that as new traders, we see support and resistance as absolute levels, not relative to environment. I could write a book on all I think that should be changed in the overall view of how S/R is interpreted.

Important fundamentals to never lose sight of even during technical analysis? — RickCheese

Risk mgmt implies that price &potential drawdown should be at the forefront of any investment- then fundamentals to me.

Can you explain slippage and how banks use it to their advantage? — szutey

Anyone in between the buyer and seller can benefit from slippage. That has been an arbitrage event since the dawn of time-avoid wide bid/ask spreads & you never have to worry about that.

What’s your Trump trade now and why? — godisrupt

Don’t really have one. I have a broad market thought that we will lift into the fall, so looking for dips everywhere. We can have conviction & be absolutely wrong. MANAGE YOUR RISK and the market will do what it will.

Whats your YOY return for the past 10 years? — SVFutsTrader

Some tough years, but rebound consistently following risk mechanics — you can check my site for performance. I outpace benchmarks =)

What are your current thoughts on JPM, BAC, MMM, CMCSA, and WMT? — tonyvincent

As mentioned I suspect we’ll rebound in to the fall so across the board I am looking for DEEP dips to add to swing positions. By Nov, we’ll be into the midterm elections and the landscape may significantly change.

Which indicators do you like best to determine S&R for equities and for indexes going into earnings? — GoldTreasure

I trade like a caveman — so I love using my eyeballs for things like S/R…. use big time frames for this.

What’s your favorite sell signal? — bxvets

Besides watching other people selling, you mean ;)? No simple answer there-what timeframe am I holding for and why I am holding the instrument gives me that answer to that.

When I try to use support and buy i see price will often keep going through it. Can you suggest anything? — kfuller83

Wait for it to recover that support. If it does, you can take the trade at its retest. If it doesn’t your assessment was incorrect. Development patience and not being afraid of missing out is the trouble

Do you use fundamentals? What is the most important number to look out for in company data? — trader9218

Yes, I do. There is not ONE number that tells us anything- we must assess a composite of both market & stock.

I’ll ask another one. Can you explain how you utilize money mgmt? How do you size your trades and mange that risk? — michaelbozzello

1st, I assess the strength of my trade thesis — then, I consider my size and risk based of the equality of trade signal. Risk is my primary concern. I am not afraid of missing out. I want to be able to live through each day to trade the next And so everything that causes me to engage has to be validated as a risk averse space.

Are your trades more day trades or long term swings? With the recent volatility do you do more daytrades? — Nirbush

Both — I do day trade, but because I believe we are in a stall, but on the rise, I wait for deep fades to take swing trades.

Do options play a part in your strategy, and if so, how do you mix? Ditto futures. Are you hedged? — bearcharts

I use options/futures. I do not hedge. That is not my wheelhouse. I am a directional trader -the math is easier =)

When determining supports and resistances, when do you use bodies of candlesticks and when do you use wicks? — Jayhead13

It’s a matter of congestion- lots of wicks congesting? I’ll use wicks; lots of bodies congesting? I’ll use bodies That was a great question!

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