Support Resistance Zones
ZoneTraderPro uses colored support resistance zones to define the patterns. Every pattern is formed by a sequence of the support resistance zones, so the first thing we need to understand is the names of the zones.
In the picture below we see Intermediate Resistance in red and Countertrend Support in blue. Minor Resistance is in light red.
In the above picture we are in a bearish trend and we can see the pink strong trend zones below the countertrend zones. We also see the pattern of the trend trade. A trend trade follows an exhaustion trade and the pattern is that we first see an exhaustion trade, price then trades to the opposite blue countertrend zones, and then trades to the opposite intermediate zones.
Countertrend zones in blue can be both support and resistance
A blue Countertrend support resistance zone is how ZoneTraderPro defines a trend.
In the picture below we are in a bullish trend. Countertrend resistance is again in blue, Intermediate Support is in dark green, minor support is in light green. We again see a trend trade pattern after the exhaustion trade.
The order of the zones is simple
- Minor Support (light green) and minor resistance (light red)
- Intermediate Support (green) and Intermediate Resistance (red)
- Countertrend Support and Resistance (light blue)
- Strong Trend Support and Resistance (pink)
The name of the Countertrend zone comes from the eSignal version in which under most circumstances it was a trade. In the NinjaTrader version it is not a coded trade. Why? The average countertrend trade makes about 6-8 ticks which is good number, if you get in at the bottom and out at the top. Additionally as the name implies, you are trading against the trend. The focus of the NinjaTrader version is trade quality, in which we are looking for 10-12 ticks or more. There will be posts as an “out of the box” trade that I will take a countertrend trade from the blue zone.