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Using Prior Parabolic SAR Reversals as Support and Resistance

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Summary

This indicator plots price levels associated with earlier Parabolic SAR switches, aiming to reveal areas where price may reverse or where a trader may reassess a position. Its settings are described as optimized especially for hourly and four-hour charts, and the author recommends comparing both timeframes to look for overlapping levels. Traders can also use the plotted levels as potential trailing-stop references or combine them with other indicators when assessing support and resistance.

The document illustrates the approach with a EUR/USD short: after a second top level was established at 1.32909, price retraced slightly before falling. It describes this retracement pattern as typical, while offering no systematic test, sample size, or performance statistics. The levels therefore serve as possible decision areas rather than confirmed reversal signals; the document also cautions that a Parabolic SAR trail may give back a substantial part of a move.

Key ideas

  • Earlier Parabolic SAR switches can be plotted as potential support and resistance levels.
  • Comparing hourly and four-hour levels may help identify areas of confluence.
  • The levels can inform trade reassessment or trailing-stop placement alongside other indicators.
  • A EUR/USD example illustrates a retracement after a second top level, but does not establish statistical reliability.

Tags

ForexTechnical indicatorsTrend followingRisk management

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.