MODULE 4: Support, Resistance, Price Flips & Big Round Numbers

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LESSON: Support and Resistance

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[op_liveeditor_element data-style=””][text_block style=”style_1.png” align=”left” font_size=”16″ font_font=”Montserrat” font_color=”%237e7e7e”]The Forex market is a market that repeats itself over and over again. Support and Resistance levels are super important to the Price Action Trader’s tool kit.

Once you fully understand how to find, mark and use key major levels, you are a long way to making high probability price action trades!

There is far more to support and resistance than first meets the eye.

Whilst marking your key support and resistance is the first step to looking for a trade, there is other support and resistance factors that must be taken into account when making a high probability trade such as;

• Is price in a support and resistance box?
• Is price flipping or making a price flip?
• Is price closing above/below the major support/resistance level?
• Is price trading into support or resistance?
• After entering the trade where are the key support and resistance areas?
• Making this trade, is it trading away from the key support/resistance? Etc.

(Don’t worry if you don’t yet understand some of these as we will cover them through the course as we go).

Why is Support / Resistance So Important Anyway?

It is because of where or what it represents. Support and resistance is supply and demand, or; big piles of piles of buyers and big piles of sellers.

If it was just lines on a chart, then it wouldn’t really matter, but the bigger and more important the level, then far greater chance there will be more sellers/buyers.

How Should You be Marking Your Levels?

The best way to mark your support and resistance lines is by marking your key levels on the daily chart and then using these same levels to make trades on your intraday charts.

The best and most key levels are found on the daily chart and marking your levels on the daily chart means you will be looking to trade from levels that the majority of the market is looking at.

Marking your levels this way and then using these same levels to trade on the 4hr and 1hr charts will mean you will always be making trades from key areas.

This will prevent you from getting into trades from substandard areas. Traders can find themselves getting into trouble when they are trying to mark support and resistance on intraday charts.

This problem can be removed completely by marking your levels on the daily and using the same levels to trade intraday. If you want to trade the weekly or monthly chart then use the higher timeframe to mark your levels.

Your Own Market Summary

Each Sunday before the new trading week starts you should sit down and mark all your Support and Resistance levels that will be important for the following week. Each chart should have a maximum of two levels per chart. One above price and one below.

Some charts will only have one level. But, you only want to put levels in places where you would make trades, so if you move to a chart that is so choppy you would not make a trade on it that week there is no need to have levels on it until the levels become clear and you see a level you want to make a trade at.

Remember: We are price action traders and we need to see the raw price. Keep it clean and simple! There is no reason to have a hundred lines messing up our charts.

Support and Resistance lines are not perfect.

They are levels or zones that represent a level that price previously found Support or ran into Resistance. We can’t simply place a thin line on a chart and expect price to respect it to the pip, however we can look at that zone as potential upcoming Support or Resistance.

Make sure to watch the video below where I go through this and show you this in detail specifically and other lessons.[/text_block][/op_liveeditor_element]