The support and resistance level strategy is also basic trading strategy next to price action. The Bollinger bands, Fibonacci, chart patterns, and moving averages and any price movements system can be decide based on the support and resistance level. According to the Forex market support and resistance level plays a major role in the market so being the Forex traders it is important to have the better understanding of it. Anyways, we thought to convey certain tips for you regarding the support and resistance level strategy. If you use these tips it will definitely help you to trade the market even better.
Why don’t you consider the round numbers
The round numbers are important in support and resistance level strategy. There are major psychological levels in the support and resistance level so when the prices reach these levels you can sell or buy currency by targeting higher profits. Actually, it is not 100% guaranteed about price hitting the round numbers but often there is a tendency for the prices to hit these levels before deciding their direction.
The flip relation to support and resistance levels
Usually, a broken resistance level tests for a support level and a broken support level tests for a resistance level. When such levels flip it’s considered as the strong levels and its better trade off. The strong price action is the reason for the broken support and resistance levels. These types of incidents occur when the price rallies a significant amount.
The confirmation sign
If you need to know when the support and resistance level has been held you just have to check out the tell-tale signal.
The Support Confirmation- in order to check it you have to see whether the price makes the higher low by not testing the support levels and it will happen after the price establishes the support level by dipping back.
The Resistance Confirmation- the price will not test the resistance level but it will show the lower high by establishing the resistance and then pulling back. By using the support and resistance levels it will be easier to trade the market.
The candlestick patterns
In order to decide the price movements you just have to plot the round numbers above, below the current price. If you notice the bullish/ bearish price action signal you should understand that the next price movement will be about to take the round number. You should pay attention when the price movement takes places after a pattern.
Summary- in the Forex trading the support and resistance level strategy is the core factor. If you understand it better then you are likely to trade better. We hope that our tips would make you a better trader. Actually, professional traders can carve the resistance and support level strategy into a beautiful art because they are the experts in it. But reading a few tips will not cost them anything much, so to increase your knowledge and to trade with confidence.