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HOW TO TRADE SUPPORT AND RESISTANCE THE RIGHT WAY IN FOREX-STOCKS-CRYPTO (MUST WATCH)
How to trade support and resistance the best way
Today we are going to talk about the best way to trade support and resistance and this works for both the forex (currency markets), stocks and cryptocurrency markets.
TO use support and resistance in your trading, you need to understand how the currency or stock you are trading usually moves. You need to look at the chart as a whole and learn to identify patterns and behaviours in the instrument you are interested in trading. I am going to teach you the different types of support and resistance, and also help you understand the different probabilities of each method.
To make it simple to understand, an area of support or a resistance, is an area where price tends to stop in momentum and either break it or start consolidating.
When learning about technical analysis and this way of trading, support and resistance is the core technique used by almost all traders out there. It is easy to identify, it has a strong probability of working, and it helps to show what is going to happen in the future. We can never be 100% certain what will happen, but we can increase our probabilities by using proven backtested methods to anticipate what the next move will be. And support and resistance is the core foundation of doing that. But there are so many different ways to trade support and resistance, and some are better ways than others. But I am going to discuss what I feel is the strongest way out of all. It is a combination of being incredibly simple to understand and use, but also very accurate at identifying major areas of potential reaction.
So let’s go over a few key points that I want you to write down, these are the rules for support and resistance.
1. Always identify a fresh zone in the market, the less times that area has been tested before, the stronger it will become. So you can learn to predict the probability of a break through happening or a reverse happening. This is the ground foundation to learn how to anticipate where the markets is heading next. By utilising this great rule.
2. Support and resistance should be used as big price zones and not just some random small line on the chart. Learn to implement it with price action and volume and you will find yourself getting the most accurate s/r available to you.
3. Support and resistance can help you determining if the market is trending, reversing or consolidating.
4. Do not even think about taking a trade if it is not near a good S/R level. Trading in-between S/R levels are very risky and should only be done if it is a trade on the lower time frames moving towards a higher time frame confluence.