Zones vs. Lines:
How to Improve Your Chart Analysis
Use Zones to Avoid Overlooking Key Price Moves
Take a look at these two charts and tell me what you see.
(Both are 15-minute charts of USDJPY)
#1
#2
It’s the same chart – but all I did differently was plot the prior high and low as a zone rather than a line.
“So what?” I hear you cry.
Let me explain…
ZONES
Well, price very rarely just touches a level and reverses.
It often over or undershoots, but the entry or target is probably still valid.
The trouble is, when we draw a thin line on a chart, if price goes to the other side of it, all we see is a “broken” level—when it might just be a noisy overshoot.
To put it simply, lines can play tricks on our brains.
I believe zones are a much better way to display levels.
Say you are planning a reversal trade around a key level. With a zone, that area becomes your area to do business…
While price is in that area, you can look for a candlestick pattern or tape flip to time the trade.
It’s a far easier picture to decipher.
You can always do this manually using a box or rectangle drawing tool.
But I found a neat script on TradingView that allows you to plot the prior highs and lows (the most useful levels) using a box width of your choice. I used 25 pips in the charts above.
I don’t know the guy, but hat tip to “nephew_sam” for this cool little tool.
Click here to access it on Trading View.
Give it a try if you need prior high-low zones, or test out drawing your own.
I think you’ll find it sharpens your view of price and its relationship to key levels.