Mark your support and resistance area on your chart. When price approaches either area, you wait for a false break. Then you enter at the close of the next candle and set your stop loss a over the previous highs/lows. You must understand this trading strategy isn’t the “holy grail”. There are times you’ll lose to breakout traders — and at times, breakout traders will lose to you. The examples above show that a constant level prevents an asset’s price from moving higher or lower.

In the chart above, we drew Fibonacci retracement in the EUR/USD hourly chart. Our aim is to identify key levels where the price is likely to retrace after moving lower. As you can see, the 61.8% Fibonacci resistance level acts as resistance and prompts the price action to change its course. Here, we share the best technical indicators and techniques for finding support and resistance levels. As outlined above, support and resistance levels are important price points identified to help us predict future market moves.

Pin Bar and Inside Bar Combo Trading Strategy

Mark the closest highs and lows that previously occurred. You should search for lows and highs that are close to the price it is registering at that moment. When you see that the price has reversed from this level significantly, you can mark these price points as strong levels.

In the image above you can see that each time the price reaches the resistance level, it has a hard time moving higher. The rationale is that as the price rises and approaches resistance, sellers (supply) become more inclined to sell and buyers (demand) become less willing to buy. On the other hand, when the market is trending to the downside, traders will watch for a series of declining peaks and will attempt to connect these peaks together with a trendline.

Support and resistance

Horizontal trend lines are one of the most commonly used technical indicators. This is due to their simplicity and easy-to-use features. In ranging financial markets, the price action tends to bounce off horizontal support and resistance levels until a break occurs. These are areas where support and resistance levels are relatively close and price bounces between two levels for a period of time. Experienced traders will sometimes trade within these trading ranges, which are also known as sideways trends. One strategy that they use is to place short trades as the price touches the upper trendline and long trades as price reverses to touch the lower trendline.

• And if there’s enough buying pressure, the market would reverse at that location.
• If the price falls below a support level, that level will become resistance.
• Treating Support and Resistance (SR) as lines on my chart.
• For more information on trading price action from support and resistance levels, click here.

Nial Fuller is a Professional Trader & Author who is considered ‘The Authority’ on Price Action Trading. He has a monthly readership of 250,000+ traders and has taught over 25,000+ students since 2008. Checkout Nial’s Price Action Trading Course here. As for trading the break, there is an aggressive way and there is a conservative way.

Support and Resistance Levels: The Easy Beginner’s Guide

Traders apply moving averages on a chart as the price action tends to use it as support and resistance. This technical indicator is especially useful when applied in conjunction with other technical tools. When the price action approaches these levels, traders contemplate buying or placing sell orders at support and resistance levels. The logic behind this is that the price movements are more likely to react from the technically-important levels.

• As has been noted above, many experienced traders will pay attention to past support or resistance levels and place traders in anticipation of a future similar reaction at these levels.
• I have been paing people to teach me but this clear info you provid from your youtube platform is great.
• The moving average (MA) is arguably the most commonly used technical indicator.
• When a price action entry signal forms at a key level of support or resistance, it can be a high-probability entry scenario.

Can you please post about moving averages, RSI Levels and others also to find out better entry and exit points. Support and Resistance attract a lot of attention from traders. There will be some looking to trade the reversal, and others looking to trade the breakout. Then look for trading opportunities when the price has come to your levels. And you can take advantage of this scenario by using a trading strategy I’ll share with you later.