Every trader draws support and resistance lines. Few draw the right ones. After 10 years watching XAUUSD on the Daily chart, I settled on a method that actually works — not the pretty lines that look good on a screenshot.
Why Most S/R Lines Fail
Most traders draw levels where they *think* price should reverse. Random swing highs and lows. Then they scratch their heads when those levels get blown through. The market doesn't care about your lines. It cares about where other traders parked their stops, limits, and entries.
My approach? I don't predict. I just watch where price has already reacted — multiple times. Those become my levels.
My Sunday Routine
Step 1: Weekly Chart
I grab last week's high and low. That's it. These are the most important levels for the week ahead because they define the weekly range. A break above the weekly high or below the weekly low? That's a high-probability signal.
Step 2: Daily Chart Obvious Levels
On the Daily, I mark:
- Previous month's high and low
- Major swing highs and lows where price reversed at least twice
- Levels where price stalled for 5+ days before breaking
Step 3: Find the "Magnet" Levels
These are where options and stops cluster — round numbers, Fib levels, previous day's open. For XAUUSD right now, the big ones are $4,000 (psychological round number) and $4,127 (38.2% Fib + recent swing low).
Step 4: Keep It Clean — 3 to 5 Levels Max
If I've got more than five horizontal lines on my chart, I'm overcomplicating it. The best levels are the ones price has tested and respected multiple times. Delete the rest.
How I Actually Trade S/R
At support: I don't buy just because price is there. I wait for a rejection. A long wick at support means buyers showed up. A clean close above it confirms.
At resistance: Same thing. I don't short immediately. I wait for price to touch resistance and bounce off — a short wick at the top, a bearish engulfing candle, or a close near the session low.
The retest trade: When a level breaks, it often flips roles — support becomes resistance, resistance becomes support. I wait for the retest before entering.
My Favorite S/R Trade: Weekly High/Low
This is dead simple. If gold hits the previous week's high during a trending week, I watch for a reaction. If it breaks cleanly with volume, I go long with the weekly high as support. If it rejects, I short back to the weekly open.
I don't overthink it. The weekly high and low are the most watched levels in the market — institutions use them for options barriers and stop placement. Trade just these two levels, and you can be consistently profitable without ever drawing a trendline.
One Last Thing
The best level is the one the market shows you. Not the one you force onto the chart. Keep your lines few, your patience high, and let the market tell you where the real levels are.
— Lin