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Thread: Support and resistance levels

  1. #1
    Super Moderator Gulfstream's Avatar
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    Support and resistance levels

    Support and resistance levels are one of the most common concepts in trading. Oddly enough, there are plenty of exercises how to build these levels.

    At first, let's look at the basics.




    Look at the diagram above. As can be seen this zigzag moves up (bull market). When the market moves up and then pulls back, the highest point reached before the rollback becomes the resistance.

    As the market continues to move up, the lowest point reached before the reversal becomes a support level. Thus the support and resistance levels are being formed during the movement of the market and its kickbacks. All of the above mentioned is true for downward movement, but in mirror image.

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    Last edited by Gulfstream; 02-14-2013 at 08:14 PM.

  2. #11
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    In this forex trading business, there is a huge respect given to the support and resistance levels. Actually they are not a fixed price, but it is like a region/area in which 'how the price reacts' : either it breaks down/up for continuation or reverses back.

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  3. #12
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    Yes if you are going to establish yourself a successful trader then you have to calculate support and resistant level. There are many indicators which will help you at this. But you also can count your own.
    R3 = High + 2 x (PP – Low)
    R2 = PP + (High – Low) = PP + (R1 – S1)
    R1 = (PP x 2) – Low
    PP = (High + Low + Close) / 3
    S1 = (PP x 2) – High
    S2 = PP – (High – Low) = PP – (R1 – S1)
    S3 = Low – 2 x (High – PP)
    This counting will help you if you are going to trade long term and short term both position. But if you are trading in short term then you can use some object like vertical line, horizontal line, trendline, fibonacci fan etc.

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  4. #13
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    I am now you are logged back on the deal and were at a strong resistance on the Frame 4 hours and a stop loss small no more than 30 points only and is now in the way of achieving the target because the resistance to Frame a large be strong and can achieve the target by a large margin of up to 75% so I'm best deal with a large Frame

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  5. #14
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    i have an indicator installed in my roboforex mt4 platform which automatically puts a horizontal line on support 1, support 2, support 3 , pivot as well as resistance 1, resistance 2, resistance 3 on daily basis ,

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  6. #15
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    Quote Originally Posted by shihab View Post
    I want to add some point with this thread

    1. Support and resistance line for short are usually sentiment on the nature therefor for its not 100%.
    2. S/R line are never in single pip, due to its sentimental nature its an usual a region.
    3. There is no way to know if a trend will reverse, stall or continue upon reaching a S/R line.
    You are totally right, brother. However, there is no stategies that always valid. But, we need basic for our decision in forex trading. Support and Resistance startegy for example. This strategy just a tool to help us make decision. In my point of view, we can combine a few strategy to make a good trading. For example, S/R with Fibo. It will be great strategy.

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  7. #16
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    Guys, think about simple thing.

    First of all - reaction near some horizontal level is often "icing on the cake" - big buyer already was buying HIGHER than that support level (if we are talking about buyers).

    Support and resistance levels are important for traders but not for trend makers

    Traders often "throw darts in the board", do you really think that traders (retail speculators) can create a trend?
    They can bring some fuel, but first market should be ready for growth, some big guys should have supported the market before and consumed 80% of liquidity from sellers.


    Look at this picture:

    Do you really think that some big buyer has entered the market at 1.3296?
    No, because this level is the least traded level in a period of 5-6 days

    Some buyers came in before, purchased all selling liquidity and created IMBALANCE, that's why market grows, not because somebody strong kicked it from below


    support.jpg

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  8. #17
    Trader kamrul's Avatar
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    Using resistance and support to the most powerful way, but I think you have the support and resistance levels, Fibonacci levels, so you trade with the trend for the access point and the access point you may be used to predict the value that will be useful to know.

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  9. #18
    Trader alv_trader's Avatar
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    Support and resistance is one of the oldest methods in the trade and works quite well if applied properly. As we know the support and resistance points then we can easily determine when the movement will be saturated to reverse direction. But remember, no one knows where the condition of the highest price / lowest price of the market movement. When the price touches the support / resistance is not necessarily the price will reverse, the possibility could also happen to break out and continue the trend.

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  10. #19
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    Studying the charts helps a trader to analyse the Forex market and use the resistance and support levels while trading. Resistance is a price where a currency pair will meed with a lot of supply while support is a price where it will meet with a lot of buyers. Thus these prices are not easy to be breached.

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  11. #20
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    I love to do trading on support and resistance levels. It is in fact the base of successful currency trading. You cannot escape from losses if you eliminate the use of support and resistance from your trading strategy. It is a must to have in each and every trading strategy of yours.

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