And if you think about it carefully; the stats also tell us on a probable level 1-where good entries are, 2- levels of support and resistance (based off supply and demand) across multiple timeframes.
Point 2 is very very difficult to 'understand'. Like how waves from across multiple timeframes affect each other, so do their support and resistance levels. When you know that, then seeing why certain levels hold/break makes perfect sense.
There are many ways known ways to look at Supply and Demand, Support and Resistance. But all of them have their problems. Lets have a critical look at them :
1- Extreme of waves/ZZs
If we take the extreme price as an SR Line, the problem is what do we do when it breaks? What is considered as a break? If it is 'padded' into a zone, how big a zone is considered acceptable?
2- Boilinger bands at 2 std dev and various conventional indicators
Same problem as #1, but harder to use since the lines move + are not straight. I used to like them until I figured reading them on the long run kills more of my brain cells.
3- Rounded numbers / Psych Zones
Same problem as #1, but are much more reliable. Currently I am using 15+15 pips as 'padding', making it a zone. Its statistically proven. Just observe how price reacts when it reaches such zones. The problem is that its not good enough, even thou its important, since big players look at big numbers.
4- VSA and Volume based indicators
Tick volume VS Contracts volume. Its controversial, but here's my take about volume; traders don't trade volume, traders trade price. There are ways to trick volume based traders if you are a big player e.g. you don't push your lots all in one go, but in very very micro increments, spread across time, faking your way in. And VSA works off the basis of time too (on a technical level, if you look carefully), so who is correct? Too micro intensive, too isolated. I still say it does work since it measures the flight and fight reaction of the market, but its just too much brain work.
5- Sam Seiden's method
Subjective approach. IMO its not objective enough. Withnail mentioned looking at areas where price has paused previously. Ok, thats excellent, but to define price pauses in say a M1 chart does not tell us the full picture. Its a good start, but not good enough. It doesn't tell us why certain levels on M1 break. So if we plot on the M5 level and further up, we can get some answers. But it will take forever. Also, everyone sees 'areas where price has paused previously differently. Some people take inside bars, some take the wicks, some use channels. Who is correct?
6- Candle Wicks
Wicks show rejection of price. But I propose that they do not do this accurately enough on timeframes higher than H1, due to timezone differences. A trader using H4 or D1 candle will see a different candle when compared to NY time start and London time start.
7- Wave Analysis
Too subjective. Way way way too subjective. They do work, they have their merits, but I will not explain here since it will make the average person go mad. Not worth the trouble!
8- Trendlines and Channels
I like trendlines. They are good; they give me an overall view where price is going to turn or break or continue. They have a good projection of where price can go. But further observation tells me that they do not tell the full story of price action, although they did tell a good part of it. Simple, effective so long the wave / swing construction is correct. I got past that.
9- The 50% Rule
Always trade 50% retracements. Its a good rule, but heres the problem : where? Where is the trend? Which trend is this rule referring to? Which retracement are we talking about? Retracement of a candle momo? Retracement of a wave? Is this rule really 'universal'? Is the 'mid point' really so magical?
10- Point and Figure / Renko / Range bars
Price based only. No time. These are good since they filter out a lot of excessive price action, but frankly I avoided using them since I am comfortable working with price + time.
11- Jason Alan Jankovsky's work
With all this said, do not assume I am correct. Do your own research. Have your own screen time. Nothing can really replace screen time : all of my conclusions are a combination of some basic common sense + lots and lots of screen time.
See it for yourself.