The directional indicator was created to give clients instant visual recognition to see live and historical battles between bulls and bears. We understand that at market peaks the bears gain ascendancy and take control while in the troughs the situation is reversed and the bulls gain ascendancy. The levels these peaks and troughs hit can be called support and resistance. These levels are where market participants are willing to sell as the market is overpriced or buy as they are undervalued at this specific time.
The indicator is based on highs and lows in different trading periods. So for example if GBPUSD makes a high of 1.6092 in the first 5 minute bar and if it makes the same high at the end of the next 5 minute bar you will get a 2R indicator prompt. This means that the price has bounced off this level in the past 2 trading periods. The opposite will happen if GBPUSD hits a low of 1.6092 and in the second period it ends with the low being 1.6092. A 2S indicator will appear showing the price had retraced from that level.
In the example below you can see a 2R pattern has been activated and this means that the high in the 2 periods has been identical. A bright visual information indicator is also triggered in the top left and when clicked on provides relevant trade information. (Chart 2)
The live support and resistance indicators will increase in value as long as the price low or high is not broken, but we don’t stop there. We also provide the trader with historical pattern analysis which can provide traders with invaluable trade information.
If the client clicks the H button in the bottom left he will be able to see when support and resistance levels have hit over a specific period.
The dots identify when a support or resistance level was activated and if you click on the dot or bar an information tab will appear.
So Flash Trading provides instant support and resistance pattern recognition analysis which to any trader, whether they are making their first trade or their 1000th, is invaluable.
We also offer statistical data which provides trade probability outcome analysis. The numbers at the bottom of the chart show the number of support and resistance outcomes for that period and the outcomes where the period after the support or resistance is broken whether a new high or new low is created.
In our example above we have 13 instances when a support level has been hit and 7 out of those instances a new high is hit in the period preceding the initial support level. We also have 8 instances when the resistance level has been hit and 3 out of those instances a new low is made preceding the initial resistance level. The high and low analysis is to indicate to the trader that when a 2S or 2R indicator pops up, if you buy or sell at that time as illustrated in this example, there is a 53% chance of making money on support and 37% chance of making money on resistance. As long as a new high or a new low is made you have a chance of making money and that’s what trading is all about. Although historical outcomes cannot predict future outcomes it is this sort of analysis which can get the grey matter going and whether a client trades on it or not it is the mere fact that you know there are opportunities there that makes it invaluable.