Trade Forex Successfully with
Support and Resistance Strategies
Improve Your Forex Success with Valuable Techniques.
Applying the Rules:
Applying the Rules: Rules 1-3
Rule 1: Support and resistance lines are zones, not specific points. Expect prices to reverse in this general area; do not expect prices to turn about instantly. These areas of resistance can easily range up to 30-40 pips in size.
A general rule is that the higher the time frame chart used to draw a support/resistance zone, the greater the resistance of that area. Thus a line drawn off a 4 hour chart would have more significance than one based off of a 15 minute chart.
Rule 2: Wait for confirmation of a price reversal before jumping head first into a trade. Just because you setup an area where price is likely to reverse does not mean you should enter a trade the second the price hits this zone. Instead, wait for a signal that price is reversing and then enter your position.
It is critical to have some form of indicator or confirming signal to let you know price is indeed retreating from the resistance area. There are several different indicators (MACD, RSI, CCI), signals, and candlestick formations that can be used to confirm a reversal in the forex markets. A few basic ones are covered only in this section.
Rule 3: Instead of mentally noting where an area of resistance is, use a thick solid line that can be found in almost any forex charting package. Play with the positioning of the line and choose the position that visually fits the forex chart best.
Concentrate on fitting the line to the curves and tops of trends. Play around with your forex charting package. Sometimes a particular charting style offers too much information. Take the example below:
Now if you were to take this same chart and change it to a line chart you would get the following:
Play around with the different forex charts and different styles to optimize the view that works best for you.