Discussing the article: "Price Action Analysis Toolkit Development (Part 15): Introducing Quarters Theory (1) Quarters Drawer Script"

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Check out the new article: Price Action Analysis Toolkit Development (Part 15): Introducing Quarters Theory (1) Quarters Drawer Script.

Points of support and resistance are critical levels that signal potential trend reversals and continuations. Although identifying these levels can be challenging, once you pinpoint them, you’re well-prepared to navigate the market. For further assistance, check out the Quarters Drawer tool featured in this article, it will help you identify both primary and minor support and resistance levels.

The Quarters Theory is a technical analysis approach that divides a significant price range into smaller, more meaningful segments. In this framework, a "MajorStep"—for example, 0.1000 in currency pairs like EUR/USD, defines the difference between major whole numbers (such as 1.2000 to 1.3000). This range is then subdivided into four equal parts, known as large quarters. Each large quarter represents a critical level where price may pause, reverse, or accelerate, offering traders potential support and resistance areas.

Key components of the Quarters Theory include

  • Major Whole Numbers: These are the primary levels (e.g., 1.2000, 1.3000) that frame the trading range. They are used as reference points to build the finer structure of the theory.
  • Large Quarter Lines: The interval between two major levels is divided equally into four segments. These lines indicate the intermediate levels that often play an important role in price behavior. Traders use these levels to anticipate potential turning points or areas of consolidation.
  • Small Quarter Lines (Optional): For further precision, each 100-pip segment can be subdivided into even smaller intervals, small quarters. Although these lines offer additional granularity, the primary focus remains on the large quarter levels.
  • Overshoot/Undershoot Areas: Surrounding each large quarter line, slight offsets (overshoots and undershoots) are drawn to signal zones where price might momentarily exceed or fall short of the expected level. These areas help in identifying potential corrections or reversals.

For further insights, please review the following diagrams

Quarters

Author: Christian Benjamin

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