Trading Support and Resistance (using the Average True Range Stop and Congestion Dots) works on any market. For example, I had a client email this morning about a short potential on the GBPCAD. I don’t actively trade the GBPCAD but I looked at it and told him my thoughts. He responded that he could not visualize it so I waited, took the trade off the support and resistance area.
Trading support and resistance means that you BELIEVE support and resistance moves the market (I happen to believe in this philosophy). On the 60 minute chart, there was an ADX magenta peak, indicating a retracement to the ATR on the sixty minute chart. The 15 minute chart showed a congestion dot at 1.9714. I expected price to at least test this area for resistance. As price approached the Congestion Dot, buyers decreased.
Since price could go to the Average True Range on the 60 minute chart, I knew to set my stop above that area. Sure enough it came to within 3 ticks of the Average True Range Stop and then proceeded down.
I pulled in a 5 minute chart because I saw the market hesitating at the Average True Range Stop on the 15 minute chart. From experience I knew that more than likely there was something that was acting as support. Sure enough, there was a congestion dot on the 5 minute chart. I had already pulled my stop down to 1.9690 and, with price being at the support area on the 5 minute, if it went back up to test the Average True Range Stop at 1.9704, I would be stopped out.
Now I could have taken a wait and see approach but why give back profits? I am a trader and my job is to lock in profits not give them back. Chances are I would get another entry later on, especially when trading support and resistance — it simply moves the markets!