Key decision zones are pre-determined price levels where market activity has a higher than usual probability of pausing prior to changing direction or continuing in its original direction. For many this type of price level is a key factor in their trading.
Comprised of key past, current and developing support and resistance levels as well as reference points which are based on perceptions, beliefs, opinions and reactions of traders and investors and give us ideas as to where buying and/or selling pressures may weaken or strengthen.
Note: The importance of Key Decision Zones rests in the probability that markets tend to ‘pause’ at these price levels prior to continuing or changing direction.
Key Decision Zones are used by many traders and investors to quantify potential:
Risk Management Levels (Stops)
Profit Levels (Targets)
Market Reversal Levels
One of the keys to effectively using Key Decision Zones is understanding the relevant significance of the S/R Levels and Reference Points used in determining the Key Decision Zone.
Some of the primary components of Key Decision Zones are: Past, Current, and Developing S/R Levels and Reference Points including such things as: as; Moving Average crossovers, Price Bands and channels, Trendlines, Fibonacci Levels, Previous Highs, Lows, Closes, Value Area Highs and Lows, Point of Control, Tails, Single Prints, Volume Extremes, TPO Count Variations, Overnight High, Low, Close, Initial Balance, Range Extensions, Plus, Plus, Plus.
To quantify a Key Decision Zone, most traders look for price levels where there is a confluence of Past, Current, and Developing Levels and Reference Points converge, assess their synthesized value or degree of importance and mark them on our charts as areas or zones to pay particular attention to before and during our trading session.
Until next time . . .