How to trade from levels of support and resistance. Trade from levels - work strategy. Description of the trading strategy

Today we will try to figure out what is trade from support and resistance levels.

Even if you are a novice trader, they still noticed how the market, moving in a certain side, at one fine moment rests like a wall that he cannot overcome.

After such a situation, the price rollback is rolled back, after which rubbed into a new wall, the price is trying again to break through the early frontier and, if it succeeds, there is a strong jerk on the market.

This situation consists due to the levels of support and resistance, and the main pattern of the market is that the price moves from the level to the level, while resistance, one day, becomes support and vice versa.

Consider two methods trade options from levels - Indicator and immorticator ...

Trading binary options from levels, you will find the most favorable moments to enter the market, because the price near them always shows activity and it is they are the point from which the price movement is gaining momentum!

Many novice traders do not give them importance, however, as my practice shows, the lack of understanding of the basics of price movement and graphical analysis is always bad for the trading.

The main feature of trade from levels It is that they work on all possible assets and currency pairs, as well as timeframes, and complement their strategy with them, you can easily calculate the likely goals.

Advantages of trading options from levels

Forex market is some monetary masswhich goes from one hand to others. It is going, since the product in this market is one - money!

You, being a trader, take money to your decision (if it is correct), from other traders. If incorrect, then others take money from you! Yes, it's time to open your eyes and know when you earn someone lost money and gave you the opportunity to pick them up --)

In this place it is important to understand one simple thing - although we trade binary options, but in fact the market laws are ruled by major players who trade forex. That is, we are trading from expiration of options, and traders for forex, lead trading from Take Profit and stop loss!

It is due to the installation by the traders of protective orders and invisible, at first glance, price levels on our schedules.

And because everyone learn almost by the same textbooks, albeit in different languages \u200b\u200band in different countriesBut the principle of installing protective orders in all fundamentally the same one.

The most popular places in the installation of the stops are points, either in local maxima and minima, or on high maxima and minima of the signal candle, the closing price of the opening of the day.

In order to pick up money from the player, it must be knocked off the market, then you mean to break his stop orders. That is why the price moves from the level to the level. I think the principle is understandable? Trading from binary options levels, we can collect many more profitsrather than traders selling forex.

While the price rises their feet and unfold, we collect cream on this turn, correctly calculating the expiration of options that traded -)

Options for building support and resistance levels

There are two ways to determine the levels of support and resistance, namely graphic and mathematical. Both approaches have the right to exist, and their levels are equally true, since the general public enjoys these methods.

Graphic building levels

Lower levels for trading on their own quite simple - you will need such a simple tool as horizontal lines, which is available in any MT4 terminal.

In order to carry out a line with confidence and argue that this is a level of support or resistance, you need to find at least several points of conditional contact when the price has repeatedly approached him and fought off him.

• Support level - This is the level that is at the price and acts as a springboard, from which the price is lit into the side of a bovine trend. The graph is determined along the lower tails and / or candle bodies;
• Resistance level - This is the level that the price is trying to overcome. Applied to the schedule on top of the candles.
• When breaking the level of support for the price, it becomes the level of resistance. And vice versa.

Example layout of levels manually, we look below (the numbers show points for which levels are carried out):

It is important to understand that each level has its own weight and strength. It depends on the timeframe on which the levels are monitored and from the frequency of its breakdown price.

And, the more often the price tried to break through the level, but could not (more points, on the basis of which the construction occurs), the one becomes stronger.

Mathematical construction levels

Under the mathematical approach, building levels implies the use of technical indicators ...

As a rule, the levels are built on two methods, namely:

1. Trade in Murray levels, actually the indicator is called;
2. Trade from levels of pivot points.

An example of building a Murray indicator levels look below:

You can download the Murray indicator on this link ... Learn how to install indicators in the MT4 terminal from this article ...

Commerce from levels for post or breakdown

There are only two trading options in levels, namely:

1. On withdrawal from resistance / support;
2. At the resistance / support level breakdown.

The tributes of strong levels are not so often deceptive, but if you correctly identified the breakdown, you can earn very well. Especially if you have in your arsenal in the presence or strategy.

Fill from a level more frequent phenomenon. However, you should not miss all the levels under one comb. In practice, weak levels most often make their way, and the price through them passes as a knife through the oil.

From strong levels, the price of the entire price is fought off, but at a certain point, against the background of economic news, you can observe their breakthrough, which in most cases will be false.

Exactly therefore, trade from levels is important to apply in a complex with other instruments.

For example, such oscillators are excellent for trading options, such as, which is included in many strategies, such as this. Or the RSI indicator, which is also a frequent inhabitant of many binary options trading strategies.

Strategy for trade from levels

As an example, I propose to consider very simple strategy Commerce options from levels based on a stochastic oscillator:

• We buy an increase in the increase if the price approached the level from top to bottom, and the stochastic oscillator is in the zone of oversold (from 0 to 20);
• We buy an option for a decrease if the price approached the level from the bottom upward, and the stochastic oscillator is in the overbought zone (from 80 to 100).

In conclusion, it is worth noting that trade from support / resistance levels is the baseWith which each trader should own on the subconscious level, because it is the levels that make it possible to see the further potential of the movement, its direction and most importantly - the point of reversal.

This time we will reveal the logic underlying the construction of support / resistance levels, as well as find out whether they are really close to the "Exchange Grace".

This time we will reveal the logic underlying the construction of support / resistance levels, as well as find out whether they are really close to the "Exchange Grace".

Only a lazy trader in a couple of months in hobbies of stock trading does not have time to face the concept of support / resistance levels relative to the price movement. On the Internet, it is often striking a fairly annoying advertising on trade from levels: " profitable trade from levels "," trade from levels, like a professional "," Super-profitable trading system from levels "and all that other. In the forums, in principle, the same thing - it became fashionable to scold various kinds of indicators and praise the analysis of the empty graph using the levels. Those who trade on empty graphics look down by no one who uses indicators, because those "have not yet understood" and, therefore, far from a professional approach to trading. But the basis of this is one misconception, which is below.

Considering that I myself use horizontal levels in my trade, I can immediately disappoint all those who consider this method of analysis with something magical or superior to all other methods: levels do not give a completely no warranty of 100% profitability of transactions. Anyone is the strongest level can be easily breaking at the price. Even if all traders from your favorite forum, all analysts of the world pointed to it as "very strong" - the price may not even notice it. Why is that?

Levels do not give a completely no warranty of 100% profitability of transactions. Anyone is the strongest level can be easily breaking at the price.

Let's try to figure out that in general represent these levels of support / resistance (or demand / demand zone) and how they are formed.

The essence of pricing

And now consider Example number 1:

There are 3 tomato seller on the market.

The price of tomatoes at the first - 50 r. / Kg

The price of tomatoes in the second - 60 r. / Kg

The price of tomatoes in the third - 70 r. / Kg

Who will you buy tomatoes? Of course, the seller number 1, because It is most profitable for you. Would other people affect the same? I think yes. Thus, we come to understand the essence of the law of demand / sentences: "The lower the price of the goods, the higher the readiness to buy it."

If you transfer this law on exchange tradeThis can be said: buyers' traders will compete with each other for the lowest price offered by traders sellers.

And now it is simple: if the price of iPhone x sharply drops to 1000 rubles, then it will run much more people to buy than now :)

Customer traders will compete with each other for the lowest price offered by traders sellers.

What drives the price?

Let's assume that you are a big player founded Market Forex. Not the one that "Market Meker", because of which (supposedly) all traders suffer damages. And which (supposedly) does not have unprofitable deals. And just the usual largest. Some fund, for example. And you need to buy a lot of euros - for example, 5 billion.

You open the terminal and see for example the following picture:

According to the law of demand / suggestions, as well as logic and common sense, you will begin to buy on the smallest possible prices - 1.1400. However, we see that the volume of the euro is not enough - the seller offers only 2 billion, and you need 5 billion after your transaction with this seller, he happily leaves the market, and you will have the need for another 3 billion.

What happened?

The lowest price of the euro before your coming to the market was 1.1400. When you started to buy it - you bought the entire volume of the seller at this price (2 billion). Now the lowest price of the euro on the market is 1.1500. Thus, due to the fact that the volume of your purchase exceeded sales at a price of 1.1400, the price increases to 1.1500.
Until what point the price will grow? Before the moment the volume of purchases exceeds sales.
In our example, you also buy out the entire volume of 1.1500 (2 billion) and half of the volume of 1.1600 (1 billion). Thus, in the process of your purchase, 5 billion euros price will grow from 1.1400 to 1.1600.

What conclusion can we do?
The price grows until they buy more than they sell. Consequently, as soon as selling become more than buying - the price will start falling.

The price will grow to the moment until the volume of purchases exceeds sales.

What can stop the price?

And finally, we approached the most important point: what will happen if you want to buy your 5 billion euros at a certain price and categorically do not agree to buy everything more expensive and more expensive?

Consider the previous example, but with some modified parameters:

1.1600 - 2 billion EUR
1.1500 - 2 billion EUR
1.1400 - 2 billion EUR

You buy 2 billion euros at a price of 1.1400, after which you still have 3 billion. And suddenly you have a more active, but the same major player and starts to buy euros at a price of 1.1500, then 1.1600, 1.1700, etc. (I remember an example with an iPhone), because of which the price sharply flips up. Everything. The price has grown, and you have no desire to overpay, so you are calmly sit and wait for the price you need. If the price goes back to 1.1400, you will start buying again. If you want to buy more euros than you want to sell 1.1400 - you again stop the price drop and may provoke growth. How will it look like in the chart? About this way:

Support level 1: 1400

Those. For topics where you buy all sellers, we will observe a sharp price bounce in the chart: the price is suitable -\u003e you buy all sellers -\u003e This stop see other buyers -\u003e they start buying, the stock price is up.

And just on these price bones and are built by the most sensory levels of support / resistance.

At prices on which mass purchases occur, we will watch sharp price rebounds on the chart. It is over these rebounds that support / resistance levels are being built.

Great Secret Support / Resistance Levels

Do you already understand what I lead to? I lead to the fact that these levels, like any information, any analysis method, any indicator - are based. in the past Price behavior. Even if you analyze just the price, you already behindand analyze Past events. And the levels of support and resistance in this sense are absolutely ordinary, unremarkable analysis method, which is no better than anything, but no worse than others. In my opinion, he is slightly closer to objectivity than the numbers of Fibonacci and the waves of Elliott, because Levels are simply impossible to draw a large number of ways and, therefore, it will give you more unambiguities in decision-making. But the uncertainty of the price behavior and the likelihood of an unprofitable deal alwaysremains.

In essence, the levels are nothing more than the price ranges that were (and not!) Attractive for large shopping and sales. And no trading guru knows in advance whether interest in some kind of price range will continue, or there will be no one there.

Summing up, I would like to note that I myself began with an indicator strategy and tried quite a few different analysis methods. And for some time it also seemed to me that the levels were the best that "here he is the Grail" and that this is the most objective way to evaluate the schedule. However, with a larger immersion, the essence of market processes it becomes clear that it is possible to analyze the price with anything. And that there is no unique method, there has never been and there will be no, but it is necessary to use in trade that the trader is clearer and feeling closer.

Levels are nothing more than the price ranges that were (and not!) Attractive for large purchases and sales. And no trading guru knows in advance whether interest in some kind of price range will continue, or there will be no one there.

I chose levels because of their simplicity. With their help, it is easier to navigate in what is happening at the price schedule, revealing interesting zones to search for entry points, performing stop loss and determine the potential of the transaction. However, no additional advantages Compared to other techniques in it there is no and can not be - I can not know in advance how the price of the support / resistance level will react to me.
I also note that despite simple essence This method will take time to master the skill in its application in practice - in terms of level construction there are no clear criteria for correctness and incorrectness. Therefore, the answer to the question "how to build support / resistance levels" will be able to give only a long time dedicated to the practice of this method in the "combat conditions" of forex trading.

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4.4 5

Trading in levels

Levels are one of the most universal elements of graphic analysis, which can be applied regardless of the type of trading system. You can trade on the candle analysis, by intersection of moving averages or using the insanely large number of indicators, but regardless of this levels are always in the game. But a more curious fact is that a trader may not know a single type of analysis and a single indicator (which is certainly undesirable) - and at the same time successfully trading on resistance levels and support.

It is such trading signals that we will use in our trading system. This strategy is applicable under time periods from M1 to MN as in the Forex market, so futures and shares. It is impossible to trade on orders without knowing levels, because it is knowledge of the price levels in the hands of the trader the point of support. To put orders, focusing on your own financial opportunities or expectations, at least, are unreasonable and more and more dangerous.

We highlight three main groups of movements suitable for conclusion of transactions near critical levels:

1.Turbi from level.

2.The level of level.

3. Holding breakdown.

• transactions from resistance levels and support. For levels;

Based on the name of the trading method, we will enter the market after the price is rebound from the level of support or resistance. Here you should not make a mistake and establish an order directly on the levels of support or resistance. When we trade rebound, we want to find a balance between potential profit and risk, given that the price will go to the opposite direction. Therefore, we need to confirm that this level will give up before the onslaught of the market. Instead of opening the position immediately when touching the level, you should wait when the price bounces off the level and only then open the deal. Market wisdom reads - catching a falling knife is very dangerous ...

• transactions when passing resistance levels and support. The level of level;

There are no levels that are absolutely probability under the onslaught of price movement, so they sell only bounces from levels not enough to win. Support and resistance levels often make their way, after which it should, as a rule, an accelerated level of level. It is important to know what to do when the price breaks the levels of support and resistance. There are two approaches in trading on breakdowns: aggressive and conservative.

Aggressive approach

The easiest way to trade on breakdowns is to buy and sell whenever the price confidently passes through the support and resistance zone. In this case, we must expect a sharp pulse movement for the level. If the price passed the resistance zone but the strong movement did not follow, then you need to close the position. Causes of strong movements from levels will look later.

Conservative approach

After breakdown, many traders begin to sell their unprofitable positions, and the price fails, but after the closure of long positions, the balance of demand and suggestions returns and the price bounces a bit and comes closely to the pierced level and starts falling again. This is one of the reasons why support levels become resistance after breakdown and vice versa.

To take advantage of this phenomenon, you need to be patient. Instead of opening a position immediately after breakdown, you are waiting for a kickback to the pierced level of support or resistance and open the position immediately after the rebound from this level.

It is important to consider one important circumstance here. "Retests" of punched supports and resistance do not occur constantly. There will be times when the price, after the breakdown, will move in one direction without rollbacks.

• false breakdown

The false breakdown is one of the most unpleasant things for a trader, which served as a variety of unprofitable transactions and trap that makes millions of people around the world every day.

False breakdown - this is a breaking of the price schedule of the asset level of support / resistance, when the price of the asset can not entrenched achieved level And roll back, and this happens within one candle.

All market movements are the formation of levels, as well as breakthroughs (or rollbacks) from them. False breakthrough (False Breakdown) is most interesting. It allows you to enter the market at the point of minimum risk and maximum potential for incurring profit.

Classic false level breakdown It is bullish with bearish traps at resistance and support levels. Such traps are models, out of 1-4 bars (candles), which can be defined as a false breakdown of support / resistance level. The only one occurs during a directional long-term movement and approaching prices to key levels. Many of the traders in this kind of situations think that since the price began very aggressively approach, it means there will be a breakdown, so they begin to sell or buy or buy a breakthrough, but the market often begins to unfold, and players suffer losses.

Types of "false breakdowns"
1. Trap in the form of a classic bull and a bear at key market levels
Trap - bull, as a rule, from 1 to 4 bar pattern, which is defined as a "false test" of the key level of the market. These "false breakdies" occur after large directed movements when the market is approaching key level. Most traders tend to think that the level is breaking only because the market approached it aggressively, they will then be able to buy or sell a "breakdown", and then many times the market will deceive them, forming bull's or bear trap.
The bull trap is formed after movement up, lovers who simply observe major changes, cannot tolerate temptation, and they enter the market higher or at the level of key resistance, as they feel confident, because the market is foreseen the impulse to break through higher. The market then stops slightly higher than the level and fills all orders for "trials", and then falls below, because experienced players come and pushed the market below, leaving lovers trapped a losing long position.

2. Consolidation of "false breakdowns"
Consolidation of "false breakdowns" or trading ranges is very common. It is very easy to get into the trap, waiting for the breakthrough of the trading range, just to see how it turns back to the range. The best way Avoid this trap, just wait until there is no clear data outside the trading range on the daily chart, and then you can start looking for a price action signals for trading in the direction of the breakthrough.

"False breakdowns" can create long-term trends.
You need to pay attention to the "tails" of the candles that appear directly or near key levels on the market. How do prices react during every day session, or where they close? The most important level of the day is manifested when closing, and often if the market is not able to close outside the key level, it can signal significant "false breakdowns". Often there is an attempt to break through the price of the market, but to close the day the price rejected this level, showing the "false breakdown" or testing the level of the "false breakdown". The failure of the market to close the width key level of the market can lead to a large return or change of trend. Thus, the closure of the price bar is the most important level.

Traders who cannot foresee and identify a deceptive situation or "false trobs" on the market will lose their money in favor of those who can do it. If you pay attention to the price behavior at key levels on the daily schedule, you can clearly see "false breakdowns".

Finally.

From the resistance level well sell, and from the level of support - to buy. There is a good to buy a good level of resistance to the resistance level, and in the breakthrough of the support level - to sell. In any case, it is better to make deals in the direction of the prevailing trend. Transactions when passing resistance levels and support. Such transactions are usually performed at the time of the cost of the price from the consolidation zone. The exit from the consolidation zone should be not only sharp, but also very significant. Purchase when passing the resistance level of the transaction from resistance levels and support. These transactions are manufactured in the calculation that the levels settle that in most cases with them and occurs. At the same time, it should be noted that almost always transactions from levels are made against local, short-term movement. After all, if you decide to buy from the level of support, almost always the market is above this level and you need to first wait for the price reduction. The same is true, when you sell from resistance level. Purchase from the level of support after the false breakthrough of this level is a false breakthrough of the level of support or resistance recognizes the price movement in which the output for the level was short-term when the price has not been able to gain a new price level. This is usually the speculative nature of the price movement played by some market participants or those arisen under the influence of short-term factors. In the event of objective fundamental reasons, the price in the overwhelming majority carry out the transfer of prices for a new level, reflecting new important information that received new important information. Purchase when the resistance level is passed from this level after returning to it, this trading strategy uses a rule when resistance levels after their pass are usually becoming supported levels. The advantage of this method of trading is the expectant position that the trader chooses. The latter waits for a confirmation signal that it is not a false breakdown of the level, and enters the transaction only after re-deposit from the resistance level (now the level of support). Sale when passing a support level from this level after returning to it, this trade strategy uses the rule when support levels after their pass are usually becoming resistance levels. Here, as in the previous example, the trader is waiting for a confirmation signal that the breakdown is not false and enters into a transaction only after re-deposit from the level of support (now resistance level).

Transactions in the direction of the main trend. These transactions are made exclusively in the direction of the current trend based on its continuation and usually such positions are held for a long time. main reasonWhy transactions are not made from extreme levels of resistance and support or during their passage (the best in terms of mathematical expectation) is the specifics of such levels.

Description of the trading strategy

This trading strategy is one of the most applied on financial markets (Forex and binary options), and at the same time, one of the most reliable in terms of profit.

Its proper use allows the trader to significantly increase its trading balance on the broker's account, using the minimum of indicators and minor knowledge of the price of the price.

That first of all it is necessary to learn a newcomer, so these are levels of support and resistance. The success of the trading strategy depends on their proper definition and construction.

Therefore, to this initial, even the preparatory stage must be taken to the greatest seriousness and scrupulsiness.

Moreover, this preparatory stage is half success in the strategy under consideration.

It is worth noting that the support and resistance levels drawn on the chart work constantly, that is, the trader just once determine and build levels of support and resistance, and in the future work on them for weeks, and even months.

The trading strategy for support and resistance levels operates in two ways - to break through levels and to beat the levels. In this article, we will consider both ways to trade binary options.

Assembly graphic and indicators

The type of graphics also plays an important role in the TRADE strategy under consideration.

The most convenient, as always, consider such types of graphs as Japanese candles and bars that most fully reflect the behavior of the price of the base asset over a certain period of time.

You can also use the Heiken Ashi indicator, which also manifests itself in strategy.

All graphics can show when the trend is full of strength, or, on the contrary, weakens. To determine the strength of the trend usually look at the so-called candle figures.

Figures of force are high candles with small wicks or without them. They should be used in the strategy of breaking support and resistance levels.

Figures of weakness are small candles with small bodies or without them. It can be all famous Dodia, Wolf, Pinbara. They are used in confusion strategy from support and resistance levels.

Additionally, you can use some indicator to determine the same trend force. Usually apply oscillators.

Here are the most popular indicators for this strategy.

• stochastic Oscillator (Stochastic);
• relative force index (RSI);
• trade Channel Index (CCI);
• percentage range of Williams (Williams% R).

Oscillators show overbought or oversold of the price of the basic asset.

Also often apply the divergence of the indicator and price movement. This is considered the most reliable trading signal in the financial market.

You can use the Pivot Points indicator to determine the reversal points and further construction levels of support and resistance. It will help determine the range of support and resistance levels.

It is believed that the levels of support and resistance are necessary manually, without the use of unknown indicators. Thus, the strategy will be the most reliable and profitable.

Timeframe and binary option term

A beginner trader is important to start in this strategy from a long-term timeframe (day, four-hour), where the price behaves more predictably.

Then, when purchasing a certain successful trading experience, go to more short-term periods of schedule time.

The binary option period, as always, depends on the analyzed timeframe of the schedule. Typically, the option time is 3-5 trading periods.

That is, if the day timereime is analyzed, then you need to buy binary option At the end of the week, if the four-hour - then at the end of the next day.

Call Call Binary Option Conditions when separating support

• We are waiting for the price correction down to the nearest level of support.
• Make sure the price is litient from the support level. It should show candle shapes - top, Dodia, Pinbar.
• The oscillator is in the oversold zone or shows the divergence of the indicator and price graphics.
• Once all the conditions coincide, buy a binary option Call for 3-5 periods from the analyzed timeframe.

Conditions for the purchase of a binary option PUT when detaching resistance

• The graph defines and built all the necessary levels of support and resistance.
• We find a downward trend on the schedule - all subsequent maxima and minimum prices below previous maxima and lows. It is great if you can also conduct a downward trend line through the maxima prices, which only confirms the trend.

• We are waiting for price correction up, to the nearest level of resistance.
• Make sure the price is littered from the resistance level. It should show candle shapes - top, Dodia, Pinbar.
• The oscillator is in the overbought zone or shows the divergence of the indicator and the price schedule.
• Once all the conditions coincide, we buy a binary option PUT for 3-5 periods from the analyzed timeframe.

Call Call Binary Option Conditions for Resistance Level Publishing

• The graph defines and built all the necessary levels of support and resistance.
• We find an uptread trend on the schedule - all subsequent maxima and minimum prices are higher than previous maxima and lows. Wonderful, if you can also spend a rising trend line through minima prices, which only confirms the trend.
• We are waiting for the price punches the nearest resistance level. We are convinced that this is not a false breakup of the level of support and resistance.
• When the price returns to the punched resistance level, which has already become a level of support (property of levels of levels), we are convinced that the price is lit off from the level and buy a Call binary option for 3-5 periods.

Conditions for the purchase of a binary option PUT when pesting support level

• The graph defines and built all the necessary levels of support and resistance.
• We find a downward trend on the schedule - all subsequent maxima and minimum prices below previous maxima and lows. Great, if you can also hold a downward trend line through minima prices, which only confirms the trend.
• We are waiting when the price breaks through the nearest level of support. We are convinced that this is not a false breakup of the level of support and resistance.
• When the price returns to the punched support level, which has already become a resistance level (level mirroring property), we make sure that the price is lit off from the level and buy a binary option PUT for 3-5 periods.

What basic assets are best trading

Best of all this strategy to trade with high-voltage basic assets. Then there is an opportunity to use binary options hedging strategy.

Very good in this strategy show themselves such currency pairs like Euro - american dollar (EURUSD), US dollar - Japanese yen (USDJPY), british pound Sterling - American Dollar (GBPUSD), British Pound Sterling - Japanese Jena (GBPJPY), Australian Dollar - American Dollar (AudUSD).

It is also good to trade with such a commodity as gold (XauUSD).

With some practice, trade and resistance trade strategy will seem very simple and effective.

The only one that may have a problem - this is proper definition Support and resistance levels. But as practice shows, this problem disappears with the acquisition of trading experience.

Hello, gentlemen traders! Today you will learn all about support / resistance levels and their use in trade. They are the basis of almost all forex strategies, even if your trading system does not use support / resistance levels, knowledge about them, as well as the ability to determine them on the chart, will make you a step in front of other traders, since the levels are excellent targets for Take accommodation -Profit and safety stop orders. If before this point you stably merged your deposits, moving from one strategy to the other, today you will start making a forex. Having learned to determine the levels of support / resistance, you will not only receive a working strategy of trade, but will also be understood that it stands behind the levels that served as the price reversal and much more. It is possible that you will first find it difficult to build levels manually, but you can use the support / resistance level indicator, download which will be at the end of our review.

What are support and resistance levels?

The support and resistance levels of Forex are considered one of the most powerful tools to thekanalysis. With the help of levels, you can make forecasts of price behavior in the future. Support / resistance levels (they are also called demand and supply levels) are determined by the price on the schedule in the past, where buyers and sellers discovered the positions of such a volume that the direction of the price movement changed. Designation of support / resistance levels is carried out using horizontal lines at those points where the market turn occurred.

Support / resistance levels work on any currency pairs, gold, silver, oil, stocks, stock exchange indices, CFD contracts, cryptocurrency, etc. It is possible to build them on any timeframes, but it should be understood that the levels built on M5, M15 And M30 very quickly lose their significance, while levels on H1, H4 and D1 remain significant for a long time.

How to determine the levels of support and resistance?

To build a support level, you need to find at least two lows on the schedule at one level, where the price turn occurred by connecting them to the horizontal line. For the resistance level, you must connect the horizontal line of two maxima.

You can build support / resistance levels both by shadows or tails of candles and their bodies.

Sometimes it is better not to work with support / resistance levels, but with zones. This is especially true for small timeframes when it is impossible to conduct an accurate level at one price. In this case, support / resistance areas are carried out with rectangles in the trading platform toolbar.

When can support be resistance?

When the price breaks the level of support down, and then returns back to this level, but it cannot break through the back, and continues its downward movement, the old level of support becomes a new level of resistance.

When can resist support?

When the price breaks through the resistance level, and then returns back to this level, but it cannot break through the back side, and continues its ascending movement, the old level of resistance becomes a new level of support.

Trade in support and resistance levels

Before starting trading on support / resistance levels, it is necessary to find them on the chart and designate horizontal lines. Since these levels are a guide to enter the transaction for all traders, this observation can be used for trading. When the price is approached to a strong level, you can expect two options for the development of events: rebound from level or piercing it. The most likely option is a rebound from the level, since at this time most traders close their transactions, fix profits and open up new positions designed for the market turn. In addition, large volumes are needed for breaking through a strong level. Recall that this is mostly strong. However, they at one time can be broken under the influence of important economic events.

Trade from resistance level

If the price closely approached the resistance level, and turns down soon, then you can open a deal for sale by setting stop loss above the resistance level.

Trade from support

If the price closely approached the level of support, and turns up to turn up, then you can open a purchase transaction by setting stop loss below the resistance level.

conclusions

So, now you know what support / resistance levels are, and how to apply them in trade. Of course, it is important to understand that not all levels are equally useful. There are strong levels that do not lose their significance for years, but there are weak levels, which sometimes should not even pay attention. Do not climb the schedule in countless levels. Choose only high-quality and beautiful levels. It is also necessary to remember that support / resistance levels are just a tool tool, not a ready-made strategy. If you apply it in combination with your strategy, you will get a powerful trading system.

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