Support and Resistance Rail (SR Rail)
Support and Resistance Coordinates
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1st Coordinate (Lower Support):
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The 1st coordinate represents the lowest support level. It is a price point where there is a strong demand for the stock, preventing it from falling further. This level often acts as a floor for the price.
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2nd Coordinate:
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The 2nd coordinate is a higher support level than the 1st but still below the midpoint. It signifies another area where buying interest is likely to prevent the price from dropping.
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3rd Coordinate:
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The 3rd coordinate is closer to the midpoint between the lower and upper levels. It acts as a moderate support level and can serve as an early indication of potential price stabilization.
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4th Coordinate (Midpoint):
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The 4th coordinate is the midpoint between the 1st and 7th coordinates. It can act as both support and resistance, depending on the direction of the price movement. This level is often referred to as the equilibrium point.
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5th Coordinate:
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The 5th coordinate is a moderate resistance level above the midpoint. It indicates an area where selling pressure might start to increase, potentially capping the price rise.
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6th Coordinate:
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The 6th coordinate is a higher resistance level, just below the upper resistance. It signifies a stronger resistance area where the price might face significant selling pressure.
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7th Coordinate (Upper Resistance):
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The 7th coordinate represents the highest resistance level. It is a price point where selling pressure is strong enough to prevent the price from rising further. This level often acts as a ceiling for the price.
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Step-by-Step Process for Positional Trading​
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Identify the Seven Coordinates:​
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The 1st coordinate is the lower level, and the 7th coordinate is the upper level. These coordinates represent significant support and resistance levels.
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Indications and Their Meanings:
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I (Intersect): Indicates that the price intersects a coordinate.
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C (Close): Signifies that the price closes at a coordinate.
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I 1 to I 7: Indicate which past candle (from the previous to the seventh previous) intersects the coordinate.
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C 1 to C 7: Indicate which past candle (from the previous to the seventh previous) closes at the coordinate.
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Entry Signal:
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Monitor the stock price. An entry signal is generated when the stock price closes (C) below the lower (1st) coordinate.
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After closing below the lower coordinate, wait for the price to bounce back and intersect (I) the lower coordinate upwards.
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Confirming the Bounce Back:
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Confirmation of the bounce back. The price should intersect (I) the lower coordinate upwards, supported by intersections from the previous candle (I 1).
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This indicates a recovery and potential upward movement.
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Opening the Position:
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Initiate a buy position once the bounce back is confirmed with an upward intersection (I) of the lower coordinate, considering the previous intersections (I 1).
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Use additional WIC indicator to further validate the buy signal.
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Holding the Position:
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Hold the position as long as the price remains above the lower coordinate.
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Continuously monitor for any new indications that might suggest changes in trend.
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​7. Practical Considerations
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Risk Management: Always use stop-loss orders. Place stop-loss orders slightly below the lower coordinate when entering the position.
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Market Conditions: Stay informed about broader market trends and news that might impact the stock’s performance.​
8. Exit Signal:
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The exit signal is generated when the price intersects (I) the upper (7th) coordinate.
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Ensure to consider intersections from the previous candle (I 1) before finalizing the exit decision.
​Conclusion
This refined strategy, with detailed indications for intersections and closes across multiple previous candles, leverages wave intersection coordinates to identify robust entry and exit points. By following these steps and incorporating diligent risk management, traders can effectively navigate the complexities of stock trading.