What does support and resistance mean in forex? In this article, I will make it very clear for you! We at joebenz.com will make it even simpler and very easy to understand, support and resistance in forex are widely asked questions with possible few good answers out there!
And most of the answers to support and resistance are not made very clear to most traders especially those that are starting new, there are lots of incentives about support and resistance.
But you need to learn how to start using it to your advantage! Well, let’s dive deep into it now, what is support and resistance in forex?
Yes, forex trading has a zone called support and resistance these are areas where buyers or sellers are exhausted, but more explanation below, is it true that trading those key levels is profitable? Yes, lots of traders out there trade only those.
Key levels call support and resistance! You can join them by learning how to trade key levels. The support and resistance level is a way to go! The trading key level is fun and easy to follow.
You can make your entire trading life on support and resistance, the amount of winning trade using those key levels is limitless! Many traders do ask how much I can make simply trading the key level!
Just as I said earlier the amount of money or better still profit that you can make on the key level are limitless, a time young traders do ask can I simply trade nothing else but only key level?
The answer to the question is yes! I said it earlier you can make or entire life just or simply trading the support and resistance level, but there is a lot of strategies to be used during trading those key level! You possibly want to know right?
Yes of course we at joebenz.com always care about your trading journey and your success is our ultimate priority! We have a lot and a lot of strategies to use while trading the key levels.
We will connect you to our YouTube channel there, and there you will get all the strategies you to be successful.
How to find support and resistance levels?
View forex, commodities, and indices support and resistance levels. Find out where they are strong, moderate, and weak, as well as the trend’s direction and strength.
Support and resistance are important concepts in the financial markets that assist traders comprehend, evaluate, and act on chart patterns.
Support is a price level where a downtrend stops owing to increased demand for an asset, while resistance is a price level where an uptrend reverses due to a sell-off.
FX traders may use forex support and resistance to better understand where to join and exit trades, limit risk, and profit from a favorable risk-to-reward ratio. To put theory into practice, learn more about trading using support and resistance, click here!
You may want to read this article: Understanding Risk Management in Forex
How do you identify support and resistance in forex?
Identify the highest peak on the chart and designate it as the All Time High after you’ve opened the chart in the time range you’ll be trading (ATH). Then locate the lowest bottom and designate it as the All-Time Low (ATL).
In the figure below, we can see that prices are in a downward trend. A small horizontal line is drawn between each peak and trough.
Each lower low will act as a support level, and each lower high will act as a resistance level, in a downtrend. Take a look at the graph below to see what I mean.
In an upswing, the converse is true. Each successive higher peak will be a level of resistance, and each successive higher dip will be a level of support.
How to find support and resistance levels
Finding the support and resistance level is quite simple or let say easy! The first thing you need to do is to zoom back your chart until it becomes small in size and you can be able to see all your chart view in one window! Then look out for pointed peak high and pointed peak low, if possible confirm it in a various timeframe from low timeframe to a higher timeframe, and also look out for previous shapes of that nature you are good to go, but below are some key factors to look out for:
Keys to Lookout for while trading support and resistance
- make sure to look out for previous Key level
- Never enter a trade when you did not confirm a reversal
- Always check if the size of the candlestick reduce while approaching the level (momentum)
- Always check to see if candlesticks are forming wicks and shadows on the key level
- Ready for target entries when you confirm reversals
1. make sure to look out for previous key levels
Looking back to spot the previous key level, make you the best support and resistance trader, if you decided to enter a trade on any key level without considering to look back on the previous key levels for confirmation there is no how you will be successful trading any key level!
Those previous key levels give the courage to go in without having a double mind! The previous key
Level will also help you determine your entries! Because you may spot out the safe zone for entries from the previous key level, just the way I said earlier trading key level is fun and not only fun is also easy to follow.
I everything of life there are rules to follow! If only you can follow those rules and guide trading and making money on the support and resistance will be like child play!
The assurance that you will make money on a key level is always certain, just follow the simple rules and that is it.
2. Never enter a trade when you did not confirm a reversal
To enter any trade on any key level please always make sure you confirm a decent and reliable reversal from the key level, how do I confirm a genuine key level reversal? That is the next question you probably want to ask right?
You will confirm a good reversal when you see that the reversal has taken place and started going in the expected direction, and all you have to do is to confirm that the reversal is on the safe zone before you enter the trade, what is a safe zone anyway?
That will be another article to look out for on joebenz.com only but let me give you some instances, a safe zone is a possible zone you know that a trend will not reversal to its previous state! At that point you have an assurance of safe trend riding without no any doubt.
Well we all love to ride the trend right? No forex trader that will not enjoy riding a trend, what is the trend? That will be another article to look out for on joebenz.com.
And let me tell you a little bit about it! A trend is a sharp moving of a currency pair, stock, metal, or oil in one direction, and it can be an up or down trend, what matters is the sharp smooth movement!
And you can make a reasonable amount of money simply following the trend, well take your time thus it will take time to follow all the rules, but it worth following.
You may want to read this article: How to know when trend is not your friend?
3. Always check if the size of the candlestick reduce while approaching the level (momentum)
Do you know or even notice a price or better still let call it candlestick when approaching a well define key level? Its size will begin to reduce which is call momentum.
the size reduces because the buyers or sellers are exhausted on getting to that level! Let me make it clear if is an uptrend when the candlesticks are approaching a well define resistance level the candlestick body will begin to reduce in size! But why?
The buyers are losing control of the trend and there are also getting exhausted, and this sign shows that sellers are coming in very fast to their run! And if it is a downtrend! The candlesticks body will begin to reduce in size when approaching a well-defined support level.
The course of it the momentum that is the sellers are losing or not in control of the trend any longer and they are exhausted and buyers are coming in very fast for their run. If you can always stick to those rules why not! Trading on the key level will be very easy for you!
We at joebenz.com try our best to make it simple and easy to understand this article, nevertheless never give up keep pushing and have it in the back of your mind that this is a challenge you need to win.
4. Always check to see if candlesticks are forming wicks and shadows on a key level
The easiest way to know or better still identify a good key level to trade are you seeing the candlesticks are forming long or short wicks and shadows, that is how to identify a possible key level that will reversal and continue on its new course!
Traders often overlook all of those rules and they feel as if it cannot work, but am telling you the truth all those steps work fine, and if you follow those simple rules you can trade the key level effectively.
And also make a decent profit in it, to be honest traders who trade on a support and resistance level keep all of those rules in place.
If you want to depend on only trading the key level then success begins with you and believe me now is the time, take your time to study those simple rules and lead your way to success.
5. Ready for target entries when you confirm reversals
Always stay inform and target when is the best time to enter a trade when you confirm a good reversal from a key level, I said that earlier that when you confirm all the other rules in place and you confirm that this is a possible reversal.
Then you need to wait for a magician to tell you to enter your trend the long run, trading those key levels are fun I keep repeating that well at your end you to follow the simple rules very always, targeting the entries is the most fun part of it.
After all of those rules the next thing you are looking is the money you will make from trading the support and resistance, some traders do ask me on my social media handler that can I make money simply trading the support and resistance?
I keep on telling them is very possible but I also let them know about the rules they need to keep in place, I love trading the support and resistance yes! I love money too, and believe me, even you reading this post or article also love or like money right?
Hmm let keep on moving and always hope for a better life, we at joebenz.com your success is our priority, we always like it if you come back with a testimony of your success trading forex entirely, without money we all know that life can be miserable right?
Take your time to study everything step by step and later you will thank me for sure, well I do have a YouTube channel that you may probably like and get all the free trading strategies you never see before!
Please always remember to subscribe and hit on that bell notification so if I have a new video you will be notified.
What is the resistance level?
What is the resistance level? Is a level where we have low buyers or better still the buyers are exhausted and the sellers are stepping into the market, the level at which this happens is called the resistance level.
And the next thing you need to ask is how can I know that a resistance level will hold? That is not breaking above? Yes, that is a good question anyway!
No one can predict it 100% thus! But we can predict it up to 98% and it works very well! To predict that a resistance level will hold is very easy all you need to do is check-out for candlestick having long wicks on that zone.
Those wicks are a good sign of exhaustion and the buyers are no more in control! And that the sellers are stepping in for a long run, make sure you follow all the precautions before entering a trade on a resistance level.
One of the precautions is to make sure you see the candlestick forming wicks on that level and make sure the candlestick size is getting smaller and smaller.
Look out for previous resistance level to confirm that the present resistance level will hold, have any questions please let me know in the comment section.
What is the support level?
On the other hand support level is a level where the sellers are getting low that is to say the sellers are getting exhausted, if sellers are stepping out of the trend of course you should expect the candlestick on that level will be forming shadows, I mean long shadows yes that is the possible sign that the level will hold!
Trading support level is quite fun only if you understand what you are doing, many traders depend only on trading those levels, well to start trading support level you need to put all of the precautions am about to reveal to you.
Let’s dive deeper first thing to look out for is candlestick forming long or short shadows just like the way I mentioned earlier then you also need to look out for the candlestick size is getting smaller and smaller, then check back and see if it tally with the previous support level, that is how to trade with the support level.
Support and Resistance Indicator
In today’s forex day-to-day life there is a lot of forex support and resistance accurate indicators to help you figure out the exact key levels, many traders found it very difficult to draw or point key levels.
But that is no more! With the help of many support and resistance indicators both free and paid to figure key levels made easy.
Will I make reasonable money trading key levels?
If your question is whether you will still make money trading the key levels, the answer to your question is yes! Lots of people do often asked this similar question in the forex industry!
Well in this part of the article I explain all you need to know, putting all the precautions above for sure making money trading on key levels is 100% sure profits, thinking to start trading key levels I will tell why not!
Go ahead, but please make sure the precautions are in place, make money now and live happily ever after, and guess what you will surely thank you later. Remember that I said rules right?
Yes do not joke with those rules or else you will never make money trading the key level, many professional traders live their life only trading the key levels, you probably can do it too.
How does resistance turn into support?
Another technical analysis concept is that support may become resistance and vice versa. When a price breaks through a support level, that support level might become resistance.
The break of support indicates that supply forces have triumphed over demand forces. As a result, if the price returns to this level, supply will likely rise, creating resistance.
The flip side of the coin is when opposition becomes support. Changes in supply and demand are signaled when the price rises over resistance.
The breakthrough over resistance indicates that the forces of demand have triumphed over the forces of supply; if the price returns to this level, demand will likely grow and support will be established.
How do you determine strong support and resistance?
Price levels that have lately triggered a trend reversal are considered major support and resistance regions. If the price was going upwards before reversing to a downward trend.
The price at which the reversal occurred is a significant resistance level. A strong support level exists when a downtrend stops and an upswing starts.
When the price returns to a big support or resistance level, it frequently finds it difficult to break through and move in the other direction.
If the price falls to a strong support level, it will often rebound back up.
The price may finally break through it, but it usually does so after retreating from the level many times.
What stop levels are the best for trading on key levels?
Well, all been said we at joebenz.com will give some recommendations, trading on key levels is quite profitable especially you catch the move very young! I mean if you join the new reversal, do you know that key level trading can result in a long trend riding?
Yes if you join a new trend what do you think? That is money! I mean more money! The best advice I give about trading on a new trend or trend riding is always to use trailing stop loss, but what is trailing stop loss?
Well, that will be topic or article for another day, To make you understand forex is my priority here at joebenz.com, and believe my success starts with you the day you discover this website and its articles, let move on.
The best stop level to use it all depend on you as a trader because some trend can move up to 300 to 400pips before changing course yes!
So setting your stop level which takes profit and stops loss to 50 – 50 is ok to let say take profit 50 pips and stop loss 40 to 50 pips as well.
But since we all know that a times trend move very well before reversing all you need to do is to apply the use of trailing stop loss.
Is trading on support and resistance risky?
No part of trading is not risky! The support and resistance trading carries high risk too but always remember that when you follow all the rules mention above there is doubt you will come out in flying colors! Everybody wants to make money.
But there is always a price to pay, the price to pay for trading on support and resistance level is to just follow those rules and that is simple right? I wish you good luck and happy trading.
Conclusion
In summary trading the key levels just the way I said earlier is to quit fun and you can make money very well, but always remember about the precautions as a trader.
Well the precautions that many trader cannot follow is the main problem this is why many traders even the professionals face in the industry today, wishing you the best of luck is my priority now!
Go and succeed, I pray for plenty of money in your account, just wish me well too I will appreciate that! I just hope this article helpful and if you want to get more value from me about forex on a video, strategies and indicators subscribe to my YouTube channel Joseph Benson Click Here.
If you have any questions or comment you can drop them in the comment section below thank you, I hope I will see you in the next article bye-bye. With love from Joseph Benson.
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