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Getting in the zone drawing support and resistance lines pt1

My channel and videos are for learning purposes only. I do not give advice on when to take trades or financial advice of any sort. You trade money at your ow...

By S. Sarac November 15, 2025
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Getting in the Zone: ADR Selection and Monthly Support–Resistance on GBPNZD

When focus slips or the market feels unclear, forcing trades is the fastest way to bleed an account. This lesson shows a structured way to “get back in the zone”: start from ADR, choose the right pair, then rebuild support and resistance from the monthly down.
The case study revolves around GBPNZD (often abbreviated GZ), using ADR extremes and a clean, manual mapping of levels to frame high-probability shorts.

Market Context & Setup

The trading day starts in a slightly messy state: a few shorts have already been taken on GBP pairs (cable short, GBPJPY short, and others), and the pound is now overextended. Price has moved a long way, and the risk of “grabbing falling knives” is high if a trader keeps shorting blindly. The first step is not to take another trade, but to step back and look at an ADR overview. Darren uses a dedicated ADR chart with different colours or lines to show the 100-day ADR, the 14-day ADR, and the current day’s movement. He scans across pairs for two things

  • Overextended instruments that have already used most of their daily range.
  • Under-moved instruments that have barely used their ADR and therefore still have room to move.

In this environment, GBPNZD stands out as being close to its 14-day ADR, explaining why it is already on the watchlist. At the same time, some euro pairs have barely moved — only around one-third of the 14-day ADR and less than a quarter of the 100-day ADR. Those “quiet” pairs also have potential if they wake up later in the session. With GBPNZD selected as the focus market, the next step is a pure price action exercise: open a completely clean chart on the monthly timeframe and draw the key support and resistance lines by hand. No indicators, no automatic zone tools — just candle highs, lows, and closes.

Core Tools Used in This Session

Average Daily Range (ADR)

The ADR is used as a market selection filter rather than a timing tool. Darren tracks both the 100-day and 14-day ADR

  • The 100-day ADR provides the “big picture” of how far a pair normally travels in a day.
  • The 14-day ADR gives a more responsive, recent average.

Pairs that have already travelled close to or beyond their ADR are treated as overextended; pairs that have only done a fraction (for example, one-third of the 14-day ADR) have room to move and are candidates for trades later.

Monthly Support and Resistance Lines

The monthly chart is the foundation. Lines are drawn at

  • Candle lows and highs that have clearly acted as support or resistance.
  • Levels where price is “trying to close through” but failing repeatedly.

Importantly, the current monthly candle is not yet closed. This means that any apparent break of a level on that candle can still reverse before month-end. So monthly lines are drawn with that uncertainty in mind, and the current monthly structure is treated as “in progress”.

Three-Candle Reversal (3CR) on the Monthly

A clear three-candle reversal pattern on the monthly chart is identified

  • Candle 1 and 2 form a swing (for example, a high and a lower high, or vice versa).
  • Candle 3 breaks and closes beyond the lows or highs of candles 1 and 2.

That “break and close” is crucial. On GBPNZD, the monthly 3CR has broken and closed to the downside, giving a strong structural bias to look for shorts on lower timeframes.

Higher Timeframe “Clear Air” Between Levels

Once the monthly lines are drawn, dropping down to the H1 chart reveals the distances between those levels. What looks like a crowded monthly chart turns into large gaps on H1

  • A long way from current price to the next monthly support or resistance.
  • Areas where there is “clear space” for price to move without obvious structure in the way.

This idea of clear air between higher timeframe levels is used to define realistic targets rather than trying to catch every last pip.

Trade Example(s) from the Lesson

The sequence begins with the trader feeling out of tune after several GBP shorts. To avoid emotional trades, the process resets

  1. Scan ADR Across Pairs
    The ADR chart shows which pairs are extended and which have done very little. GBPNZD is near its 14-day ADR, confirming that it has already been active. Some euro pairs are sitting at roughly one-third of their recent ADR, offering potential later.
  2. Choose GBPNZD and Open the Monthly Chart
    GBPNZD is opened on a totally clean monthly chart. The goal is to re-anchor the mind in structure

    • Draw horizontal lines at major lows and highs.
    • Mark levels where the current monthly candle is trading around important prior lows.
    • Note the three-candle reversal pattern that has broken and closed lower, signalling downside momentum.

    At this point, the message is: the monthly has likely reversed to the downside, and the lows of two previous candles have given way. The current candle has pushed below those lows.

  3. Refine Resistance and Support on the Monthly
    Additional lines are drawn

    • A resistance line where price is currently battling to get through.
    • A second resistance line a bit higher, which would be the next test if price retraced.
    • A support line below, marking the next obvious place where price could react.

    The key nuance: the current monthly candle has not closed. Price could still reverse, close back above prior lows, and re-validate them as support. So the trader stays aware that any “break” on the monthly is provisional until the candle closes.

  4. Drop to the H1 Chart and Observe Behaviour Around Monthly Levels On H1, the monthly lines now mark major structure:
    • Price has pushed down below a monthly low.
    • It has then pushed back up and started to use that same monthly low as resistance.
    • Later, once it breaks cleanly, that same level can flip again into support on subsequent retests.

    This “push below – push back above – use as support/resistance” behaviour around a monthly low is a huge tell. When a lower timeframe shows price accepting a monthly level from the other side, it often confirms the higher timeframe bias (in this case, bearish). An experienced trader could have

    • Watched the initial break below the monthly low as a warning shot.
    • Waited for price to retest that level from underneath and fail.
    • Used that failure as a high-probability short trigger, in line with the monthly 3CR.
  5. Build the Full Top-Down Picture After the monthly lines are in place and the H1 behaviour is understood, the trader can work down further:
    • A vertical line is placed on the current monthly candle to mark the active month.
    • Within that, weekly and daily candles will create intermediate levels, reducing the huge gaps seen on monthly.
    • Each layer (monthly → weekly → daily → H1) shortens the distance between price and the nearest meaningful level, sharpening entries and targets.

    Even without a specific entry candle described in detail, the logic is clear: the trade idea is to short in the direction of the monthly 3CR, using the monthly low flip as context and aiming into the next obvious support below.

Practical Rules & Checklist

  • When you feel out of sync or distracted, stop trading and scan ADR across your watchlist before doing anything else.
  • Use both 100-day and 14-day ADR to classify pairs as overextended, normal, or under-moved for the day.
  • Prefer to focus on instruments showing either clear overextension or clear room to move, not the ones stuck in the middle.
  • Start analysis on a clean monthly chart with no indicators; draw horizontal lines at significant highs, lows, and repeated reaction points.
  • Treat any break on the current monthly candle as provisional until the candle closes; price can still reverse and close back inside.
  • Recognize three-candle reversals on the monthly: a decisive break and close beyond the prior two candles often marks a directional shift.
  • After drawing monthly levels, drop to H1 and study how price behaves around those levels: flips from support to resistance (and vice versa) are high-value information.
  • Use “clear air” between higher timeframe levels to define realistic targets rather than aiming at random distances.
  • Mark the current monthly candle with a vertical line, then fill in weekly and daily levels inside it to refine your structure map.
  • Do not be alarmed by many lines on the higher timeframe; on execution timeframes, those lines are far apart and create logical zones to trade between.

Darren’s Mindset in This Lesson

The central mindset here is discipline when out of tune. Instead of chasing more trades after a run of shorts, the process is deliberately slowed down. The trader acknowledges distractions and resets by going to objective tools: ADR and higher timeframe structure. There is a strong respect for candle closes. Monthly lines are drawn with the understanding that the current candle is not yet finished; what looks like a breakdown today can be a false move by month-end. This reinforces the idea that levels and reversals must be confirmed by closes, not just intrabar spikes. Darren also treats support and resistance as living structures, not static lines. The GBPNZD monthly low that gets broken, retested, and reused as resistance is a prime example. The behavioural change at that line is more important than any indicator. Finally, the approach is systematic but simple: choose the pair via ADR, map structure from monthly down, follow the three-candle reversal bias, and let lower timeframes show the actual entries. Trading becomes a matter of executing within a framework rather than improvising under stress.

How to Apply This on Your Own Charts

This lesson can be turned into a simple pre-trade protocol for any FX pair. Start each session by scanning ADR across your watchlist. Identify

  • Pairs near or beyond their 14-day ADR (overextended).
  • Pairs that have moved only a small fraction of their ADR (potential energy).

Then, for each candidate pair, run this workflow

  • Open the monthly chart on a clean template and draw key support and resistance lines at obvious highs, lows, and repeated reaction points.
  • Look for three-candle reversals that have broken and closed beyond prior swings to define your directional bias.
  • Drop to the weekly and daily charts to insert intermediate levels inside the current monthly candle.
  • On H1 (or your execution timeframe), watch how price behaves around those monthly and weekly lines; look for flips from support to resistance in the direction of your higher timeframe bias.
  • Use the nearest opposing higher timeframe level as your primary target and, only if there is clear air beyond it, consider leaving a partial position to run.

Handled this way, ADR and higher timeframe support/resistance become the anchor for your decision-making, especially on days when your focus is not at its best.

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