What Are S+R Zones?
S+R zones are areas of around 50-100 pips in which the price tends to range. S+R zones are usually formed by tight ranging periods near an S+R line. The price ranges at the line for so long that the S+R line becomes useless, and a zone forms in the area the S+R line was in. Think about it as a disruption of the S+R line. After the S+R line is disrupted it can take a few weeks, or even a few months for it to return to normal. You will find that when the price approaches that area it will get sucked into a range, or it will bounce away from the area randomly. An S+R zone is no-man’s-land, and I rarely, if ever, take a trade at or near one of these zones. I simply wait for the line to return to it’s normal state.How I place them
It’s very simple to spot an S+R zone. You will find that after the price ranges on or near an S+R line the line no longer holds the price back very well. You will see the price bouncing away randomly near the line and getting caught in ranges near the line.Keep in mind, S+R zones are rare, and just because you get some ranging here and there does not automatically mean it is an S+R zone.
As you can see in the picture above, we have the original S+R line in blue, and in green, the range that disrupted that line. After that, we see random reversals highlighted in red. If these random reversals do not average out quickly (1-2 weeks), and pick a single point to bounce from, I mark the area as an S+R zone. The zone is simply there to say, “The price will probably act erratically in this area, so stay out of the market.” Eventually, the zone will form into a single line, usually returning to the original line, or at least very close to it.
