For as long as I can remember, I've been using a form of support and resistance areas in my trading. Those areas can be very useful in finding points at which the market is likely to reverse.
It is not a guarantee! But it allows a trader to find high probability trading opportunities.
In this video, I share my ultimate guide on how to trade support and resistance areas in the Forex market.
Step 1: Identifying Support And Resistance Areas
Using TradingView, I discovered a technical indicator named “Pivot Point High Low”. It displays high and low points on the chart and makes it easier to draw support and resistance areas.
Read: A Powerful Way To Draw Support And Resistance Zones
From there, I typically draw lines linking the highs and lows at the same price points. Those will become our support and resistance areas.
I recommend you perform your support and resistance analysis on a higher time frame such as the daily or weekly charts. I will use round numbers (i.e. 1.0500, 108.00, 1.2500, etc.) to place my lines. It makes it easier for me to remember key levels.
Step 2: Add Boxes To Transform Your Lines Into Areas
Since support and resistance in any market are zones/areas, I do not want to keep a single line on my chart. Having only one line that identifies a round number makes it hard to identify when the price has passed the area.
Step 3: Pay Close Attention To Pairs Reaching S/R Areas
This last step is very important. You could identify all the support and resistance areas in the world, but if you miss your trade setups, you won't grow your trading account!
To ensure that I don't miss any setups, I review the daily charts of the 10-15 currency pairs that I follow every morning. I pay close attention to the pairs that are about to reach (or at) support and resistance areas. I note down in a small notebook which pairs I must focus on during the day – those that reached the right levels.
Without a daily routine in which you review the currency pairs you follow, you are more likely to make mistakes or realize that you missed perfect trade setups.
- Do not forget that support and resistance areas consist of a tool to look at the market. It is not a strategy by itself.
- I always make a distinction between intermediary and major support and resistance areas. You can trade both, but understand that your win rate is likely to be lower with intermediary zones.
- Support and resistance can be combined with other sideways indicators
As an Academy member, I suggest you look over the Indicators Checklist to know what indicators are good to use with support and resistance areas.
Do you use support and resistance in your own trading? Do you have any tips that could help other traders? Comment below and let me know!
If you are aspiring to trade for other people while traveling, you might want to consider checking out the Desire To TRADE Academy where I’ll help you do precisely that!
If you are aspiring to Forex but wonder how to put together a solid trading plan, I recommend you grab my FREE One-Page Trading Plan Template. It will help you simplify your trading strategy on a single page!