Forex Support and Resistance Trading
In the forex faq today, we have a question from one of our fellow traders asking me where to plot the major support and resistance levels as well as how to know whether the price will break through a particulate level of S&R.
Below is the question:
Hello, Can I know which are the support and resistance levels to set exactly (mainly price levels, price zone and target price) without fibo levels.
Then how do I know whether the price will break OR penetrate the area in what time.
Besides the Fibonacci levels, you can also plot the major support and resistance levels using the pivot points. For me, I will plot the daily pivot on all my charts to identify those key levels that can repelled the price.
Another good support and resistance level is the 200 Exponential moving average. This indicator itself is a strong level of support and resistance. Try plotting it on any one of your chart and you can see that the price usually get repelled by it. If the price manages to break through it, it will usually make a sharp movement in the direction of the breakout.
As for your second question on how to know if the price will penetrate of get repel by a particulate level. I can only tell you from my own experience that the price usually don’t break through a strong level of S&R when it first hit that level. It will only break through it after a few rounds of testing.
Therefore I often trade the repulsion of strong S&R level when the price first hits that level. I will only trade the breakout after several rounds of testing the same level.
I hope that I have answered your question and do feel free to give your comment below as it will be very helpful for other traders here reading this post.