Trade Forex Successfully with
Support and Resistance Strategies
Improve Your Forex Success with Valuable Techniques.
Example of the Head &
Another example of the Head & Shoulders Trade
Here is another example using the USD/CHF.
On the 4 hour chart you can see that the 1.1680 price exhibits support and resistance zone qualities. The pair has found resistance at this level several times making it a valid zone.
Later, we see that the 1.1680 level provides support (and more resistance) for the USD/CHF.
Now we see the formation of a Head and Shoulders, however in this case it is a mirror opposite. This is referred to as an inverted or reverse Head and Shoulders.
On the daily chart you should see that price has penetrated the neckline which is also the support and resistance zone in this case.
Now you need to wait for the price to break the neckline to trigger your trade setup. Place your stoploss just beyond the last shoulder’s low and you should be all set.
The distance from the top of the head to the neckline is 248 pips, this will be the profit target and you should place a take profit order at 248 pips above the neckline.
A quick note: Notice how in this instance there is no re-touch of the neckline. The price simply pushes through the neckline very quickly and hits the profit target. Often you will see the re-touch, which will allow you to enter the trade, but other times you will not. Like all trade setups, you will not always meet the trade criteria. If you are careless or force trades, you will quickly find yourself regretting it. The bottom line here is if you miss a trade do not chase it.
From a risk management stand point it is important to maximize the effectiveness of the trade by using the proper reward risk ratio. This is necessary in both of the strategies taught in this course. A great way to figure out your proper trade size is to use a risk to reward calculator.