Best Way To Identify Support and Resistance
In today forex faq, we have a question from one of our fellow traders.
Below is the question
Which one is better, fibonacci level for support and resistance or I draw the trend line by myself, and what your trading style? Do you know any indicator that can move the stop loss to break even automatically
First of all, I will suggest you to use both the Fibonacci levels as well as trend line to look for support and resistance. This is because what we traders usually do is to look for confluence of these support or resistance levels.
If you manage to find a level where the trend line, pivot level as well as Fibonacci levels coincide. I can tell you that the price will most probably be repelled by that level. What you can do is to enter a trade to trade this repulsion.
Therefore both the Fibonacci level and trend lines are equally good to identify support and resistance.
As for my trading style, I am a day trader who usually exit my position within the same day and I use the hourly and 15 minutes chart to trade.
My trading style focus on protecting my capital and therefore I will never enter any trade that is not according to my trading plan. I also have the habit of adjusting my stop loss to break even when the trade I am in has chalked up certain amount of profit. This is to prevent myself from losing any money when the market suddenly reverses.
As for any indicator that is able to shift your stop loss to breakeven, I am not sure as I usually do it manually myself and therefore I am unable to give you any advice on this matter.
I hope that I have answered your question and do feel free to contact me if you still have any doubts.