How to Trade Support and Resistance In The Forex Market

How to Trade Support and Resistance

in the Forex Market

WHAT IS SUPPORT AND RESISTANCE?

• Support and resistance are

specific levels or zones on the

trading chart, where the price

of a Forex pair (or equity,

commodity, etc.) is likely to

find opposition.

WHAT IS SUPPORT AND RESISTANCE?

• Support and resistance areas are the zones where the interests of the market players intersect.

• Imagine a simple “Tug of War” game, where two teams are pulling a rope over a mud puddle. The weaker ones lose and end up in the mud puddle.

• In our case these are the bulls and the bears fighting for dominance in the market.

Support and Resistance Levels Being Tested

SUPPORT VS RESISTANCE

• Supports are the levels which are beneath the current price, while resistances are the levels above.

• Furthermore, when price goes down through a support level and breaks it, this level becomes a new resistance and vice versa

FIND SUPPORT AND RESISTANCE LEVELS

• A potential support turns into

an actual support, when the

price conforms to its level

more than once. The same

holds true for resistances.

Price Breaks Support, Old Support Becomes Resistance

SET ENTRY/EXIT POINTS

• Setting entry and exit points on S/R levels - The right way to enter or exit a trade around Support and Resistance is to and wait for the price to interact with the level first, and analyze the price action around the levels.

HOW TO TRADE SUPPORT AND RESISTANCE?

• Price action traders tend to

confirm the signals they get

with additional trading tools

like candle patterns, chart

patterns, oscillators,

momentums, etc.

Price Breaks Important Support Level, and Closes with a Strong Bearish Candle. Momentum confirms the Breakout, which leads to lower prices. Warning that the

downtrend may be over after the breach of the upper channel line.

Trading S/R Levels

• One of the most common ways to trade key levels is simply by trying to go with the market flow after the price has shown its bias toward a support or a resistance level

Typically, The more

the level is tested, the

more reliable it is

Check Out the “IN DEPTH”

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