Support and resistance

Support and resistance

Lesson Attachments

Support and resistance

Support and resistance are is one of the most widely used concepts in trading.  On those levels price can reverse and we can trade those reversals.

Support is a price level where market has difficulty to break bellow. Support level is always under the current price and we are expecting bounce from these levels.

 

Resistance is the opposite of support. Resistance level is always above the current price and we are waiting there for a reversal.

Drawing support and resistance starts with a line chart on H4 and H1. Switch to line chart and draw horizontal lines where you see reversals.

 

Then switch to candlesticks chart.

 


Support and resistance zones

Support and resistance levels are not just a line, but it’s an area when price can reverse, so it’s better to draw support and resistance zones.
Connect wicks to the candle body and draw a zone.

On support zone we are waiting for a bullish rejection of zone for a buy trade. Stop loss is few pips under the zone.
On a resistance zone we are waiting for a bearish rejection for a sell trade. SL is few pips above the zone.

 

If price breaks the support zone, this support becomes resistance and we can enter in a sell trade on a retest of this resistance if price shows us bearish rejection.
If price breaks resistance zone, this zone becomes support and we can enter in a   buy trade if we get bullish rejection from new support.

 

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