Support and Resistance help traders to find out spots where the market will take a reversal and it will also help us to put a safe stop loss and take profit. In this article, we will discuss key points of support and resistance levels and a simple strategy to find support and resistance levels.
Support and Resistance levels
Support level refers to a price level or zone from where due to more demand and more buyers, a reversal in price bearish trend happens. more demand causes the bearish trend to reverse. At this level, the price will decide either to reverse or to break this zone. So we will look for price action at this level to confirm a reversal in price. This is simply called support level.
Resistance level refers to a price level or zone from where due to more supply and more sellers, a reversal in price bullish trend happens. This is simply called a resistance level.
Best Timeframe for support and resistance levels
To find support and resistance levels, the daily timeframe is the best timeframe. Finding support and resistance levels on a daily timeframe and trading that levels on intraday is the best strategy,
how to draw support and resistance levels
First of all, we have to find out daily Pin bars and Engulfing Pattern. Engulfing Bar is my favorite and widely used pattern. here we will use an engulfing candle to make a strategy to find strong support and resistance levels. look at the graphical image below for understanding the concept.
Now follow the steps below
I have highlighted a daily engulfing pattern. Now we will use this bearish engulfing pattern as a strong resistance.
We have to draw two horizontal lines on the high point of engulfing bars. I mean the high point of candlewick and vice versa. These two lines will act as fresh support or resistance in the future.
After Finding out Daily support and resistance Level Then we will look for a pin bar on intraday chart M15. This will give a good risk-reward trade.
Three simple steps to find S&R levels
Simply follow three steps for strong support or resistance levels
- Open daily chart and look for a fresh engulfing candle
- Draw a zone from highs or lows of engulfing candle-like shown above
- On the intraday chart, wait for price action at the zone.
I have shown both intraday and daily chart examples. In the next article, I will show you Daily pin bar support and resistance and how to trade on an intraday chart.
I hope you will like this Article. For any Questions Comment below, also share by below links. Use Tradingview for technical analysis instead of mt4.
Note: All the viewpoints here are according to the rules of technical analysis and for educational purposes only. we are not responsible for any type of loss in forex trading.