support and resistance levels – 2nd Skies Trading

Tag Archive for: support and resistance levels

How To Find The Stongest Support & Resistance Levels

What’s inside today’s trading article?

How to find the strongest support and resistance levels
What variables should I be looking for when picking my key support and resistance levels
How do I know how strong a major support and resistance level is?

Being able to find high probability key support and resistance levels is an important skill you’ll need to build to become a profitable trader. There is no way around this. If you’re wanting to trade price action, you’ll have to learn how to identify and trade key support and resistance levels.

One of the more common questions I get from struggling traders is “how do I find the strongest support and resistance levels?”

In this week’s trading article, we’ll answer this question, along with what variables you need to look for in finding key support and resistance levels, and how to identify the overall strength of that level.

Let’s jump in…

The Mindset Around Key Support & Resistance Levels

First off, it’s important to understand you need a particular mindset and understanding about support and resistance levels. What I’m particularly referring to here is that you have to view S/R levels ‘probabilistically‘. You cannot think of them as black or white, good or bad, going to hold, or not going to hold.

Trading doesn’t work like that, nor does price action, nor does S/R levels. You have to trade and think in probabilities. There is no way around this!

Just want to get this out of the way.

Also, it’s important to think of S/R levels more as ‘zones‘ and not fixed lines in the sand. This means you realize there isn’t one price where the support or resistance is broken. So you cannot think of it like “if the EURUSD breaks 1.1350, I’m bullish, but if it’s at 1.1349, I can’t be bullish“.

Order flow doesn’t work like this, nor are all large institutional players and hedge funds parking their buy/sell orders at the same price. They will often ‘cluster‘ their orders around specific prices. And it is this small cluster (or range of prices) which constitutes the ‘zone‘.

So avoid the trap of relating to support and resistance as a single price or line in the sand. Think of them as ‘zones‘ of important order flow.

How To Find The Strongest Support And Resistance Levels (in all financial markets)

The strongest support or resistance levels will more often than not be with trend. What this means is, if we are in a bull trend, pullback levels to support will more often than not be ‘stronger‘ than resistance levels above. This is because the underlying order flow in a bull trend is more dominantly on the buy side. Holding multiple tests of a with trend level usually is a good indicator of it’s level of strength.

Until the trend changes, hedge funds and large institutional players will be looking to buy more than sell, so the order flow on those pullback levels will often be ‘stronger‘ than resistance levels, which will often fold faster.

Below are a couple examples.

In this chart on the USDMXN (daily chart), notice how the resistance levels only survive a few touches before breaking, while the key support levels survive multiple touches before creating a new leg higher? This should tell you where the dominant order flow is (on the bull side) and that until you see this structure and order flow changing, you want to be trading with trend as much as possible.

NOTE: If you want to see a good example of me trading with the trend using key support and resistance levels, click on that link to watch a video of me profiting +300 pips trading S/R levels.

Another example of how a with trend support level held multiple touches is in the USDJPY (daily chart).

Notice how the support levels held multiple touches in the middle. The ability to withstand multiple touches tells you the more dominant order flow is on the bull side as they’re able to handle multiple tests while holding the line.

Also notice how the last support level (~105.38) was just barely touched before producing a super strong bull move? Quick reactions that take out prior swing highs often denote impulsiveness and a strong amount of order flow present to hold the level for 1-2 candles before rocketing higher 1500 pips. So make sure to note these variables as demonstrating strength in a particular level:

holding the line after multiple touches
strong/short reactions from a key S/R level
with trend levels will often be stronger than counter-trend levels

Now that you have a few variables to look for, make sure you build your skills in identifying these variables till they become sub-conscious.

What Other Variables Should I Be Looking For When Picking My Key Support And Resistance Levels?

Besides looking for with trend levels, another good variable to look for are corrective structures with multiple touches on both sides of the market.

A really good example of this lately has been the AUDJPY which we’ve talked about in our market commentary recently.

Looking at the 4hr chart, you can see in the box how the price action has had multiple touches on the top and bottom of this corrective structure. What this communicates from an order flow perspective is that both sides of the market are in a state of balance, so neither side is dominant and ready to take over yet.

When you have corrective structures like this, it’s important to be trading both sides of the market until the structure breaks. This will give you a lot of trading opportunities with small stop losses (i.e. above/below the structure) while targeting the other side of the corrective structure.

In most cases, this structure would have offered several +3-4R trade setups. It is something we talked about with our members ahead of time, so congratulations to those students who profited from these trades.

NOTE: You can watch a live trade video of me profiting +160 pips trading off a key support level here.

Moving forward, you can see another example of these corrective structures on the ASX 200 1hr chart.

Although the levels are not as ‘clean‘ as the AUDJPY chart, the overall corrective structure is there and with a little more buffer, has offered multiple day trading setups for about +2R.

Hence learn to identify corrective structures with multiple touches on both sides of the market and look to trade both sides until the structure is broken.

In Summary

There are many tools and variables you’ll need to identify in the price action which can help you find strong support and resistance levels. Keep in mind, this is a skill that takes time to learn, so don’t expect to read an article and be a pro. You’ll have to build your skills in this over time. If you do this right, you’ll find yourself identifying and trading stronger support and resistance levels.

In our Trading Masterclass course we cover many other variables you’ll need to learn to find the best support and resistance levels. On top of the many lessons we have on S/R levels, we also have market commentary and trade ideas for our members 4x per week where we are identifying the most important support and resistance levels, so you can continually improve your skills.

To learn more about becoming a member and getting access to these lessons + market commentary, click here.

Until then, I hope you enjoyed this article on finding the strongest support/resistance levels, and make sure to leave a comment below.

Additional Articles/Videos To Study:
1) Live Forex Trading +480 Pips on EURUSD
2) Confirmation Around Key Support & Resistance Levels
3) Live Price Action Trade – Pullback To Support Level For +7R

Confirmation Myth, Featured Article, Forex Strategies

The Blind Entry (How It Will Leave You Trading Blind)

This is part 2 of a 4 part series. View the next one here: How the Typical Pin Bar Entry Is A Retail Entry or if you missed the first one, checkout The Price Action Confirmation Myth & the Retail Mindset

Preface

I’d like to preface this post before I share the meat and potatoes stew.

People are going to have differing opinions on how to trade, particularly when it comes to price action, and that is to be both expected and accepted.

I think as colleagues, it is perfectly ok to offer a critique on a trading method. It helps bring greater clarity and information to the trading world, especially for developing traders.

As long as the critique and constructive criticism is not personal, and not based on speculation, but simply comparing the differences in technique or approach, then it seems perfectly fine (IMO).

We see this in science, mathematics and medicine, so there is no reason why it cannot or should not be here.

I’ve recently posted a video on Why Confirmation is A Retail Traders Mindset, and not how professionals think.

This article is my critique and explanation of how and why the forex blind entry method communicates a retail traders mindset about price action.

Let’s begin.

The Critique On The Blind Entry

There is this retail version of price action, that trading a support or resistance level without a ‘confirmation signal’, is trading the market ‘blind‘.

It is called the ‘blind entry‘, because if you are trading without any confirmation signal, then you are trading the market blind.

I want you to think about that for a moment.

That a trend which has been moving for 1500 pips, selling off for 7, 8 or 9 weeks/months in a row…that if you are shorting without a price action confirmation signal (such as a pin bar, engulfing bar, or inside bar), that you are trading blind.

If that is how you approach price action, that trading without such a confirmation price action signal, is really trading blind, then you really don’t trust price action.

You don’t trust trading trends, you don’t trust price action context, you don’t trust an imbalanced order flow in the market, you don’t trust key support and resistance levels.

In reality, you really don’t trust your ability to trade at all now, do you?

Do you really think that a professional bank, prop or hedge fund trader has been sitting on the sidelines of the EURUSD downtrend these last several months, simply because they did not get a daily price action signal to ‘confirm’ the trend is valid?

Is that what you really think?

One has to ask the question, if attempting to join a well established trend, or entering the market without a ‘price action signal‘ (in the form of a 1-2 bar pattern) is trading ‘blind’, you really have to question that approach to the markets.

You have to question that understanding of price action as it is likely causing you to lose money.

In Closing

Are you one of those trading these price action confirmation signals?

Have you been sitting on your hands in trends that have moved thousands of pips, not trading them because you didn’t get ‘confirmation’?

If so, I want to hear your feedback and how this series of videos and articles is changing your perspective on trading price action confirmation signals.

Can you see the difference now in the two versions of price action being taught?

Which one do you think wins over time and why?

I want to know, so please comment and join the discussion below.

Did you like this article and find it useful?

Please make sure to like, share and tweet it below.

And do watch my next video in this series where I show the difference between the 50% retrace tweak entry vs. a professional traders entry.

Forex Strategies, Price Action Trading

Price Action, Breakouts & Order Flow

Today I am writing a potent article about pre-qualifying forex breakouts, particularly understanding them from a price action & order flow perspective. When you pre-qualify a breakout, you put yourself in a position to identify it as a high or low probability breakout. To do this however, you have to understand what makes a successful forex breakout trade both from a price action and order flow perspective.

In my prior article 3 Keys for Identifying Breakouts, I talk about 3 such parameters for pre-qualifying forex breakouts. They are;

1) Well Defined Support/Resistance Level

2) Pre-Breakout Squeeze/Pressure/Tension

3) 20ema Carry

When you can identify these prior to a potential breakout, you highly increase the probabilities of trading a successful breakout. But let’s dig into this a little deeper as to why from a price action and order flow perspective.

Order Flow Behind Breakouts
From an order flow perspective, breakouts generally start with an initial balance between buyers and sellers. This usually results in a range of sorts, with two clearly defined support and resistance levels. When you get several touches on these levels, this clearly communicates where both sides of the players are parked (and likely their stops as well). The more touches on these barriers, the more players are brought in.

Those who are bullish will get in on the bounces off support, while bearish players on rejections off resistance.

However as time goes on, tension starts to build between the two camps as someone will eventually want to take control. In almost all cases, the side with the largest number of orders and money behind their camp, will win this tug of war.

This usually manifests in a higher low (HL) or lower high (LH) being formed inside the range, and more aggressive pushes towards the other line in the sand, while less or no touches on the other side, almost as if the sellers or buyers could not reach the other support or resistance level. It usually looks something like the chart below.

EURJPY 5M Chart

Looking at the chart above, you’ll see a clearly defined support and resistance level with a minimum of two touches on each side. This tips us off to where the bears and bulls are parked on the chart with stops just above/below the levels.

Now you will notice each rejection at A & B minimally went up to 125.05 before coming back down and touching the same support level at 124.80.

C pushes price back up to 125.05, but this time the rejection fails to reach 124.80, and can only make it to 124.85. From an order flow perspective, the buyers are starting to get more aggressive and confident their level will hold, so they are buying up higher (at a more expensive price).

The next pullback at E is also higher, so we are seeing a continual change of hands by the bulls buying higher from support (and their defenses at 124.80).

Now notice every push up from B, C, D, and E only makes it to a maximum price of 125.05. But with F, it goes to 125.10. There were probably some intraday bears shorting at 125.05 (now stopped out), while the rest were still short at 125.15.

Now that price is pushing up towards the resistance without ever touching the support, this communicates the bulls are taking control of the price action with more orders and money, and will likely continue to squeeze the bears out.

This price action squeeze takes out smart sellers early as they recognize they are about to get stopped out if they stay in. The slower players stay in until they are at breakeven, while the slowest and most stubborn bears stay in till they are stopped out.

EURJPY 5M Breakout Chart

Using the chart above, we see the final stage of the breakout which is the 20ema carry in Box A. This “20ema carry” is a common price action formation prior to a good breakout, as it shows;

a) the mathematical representation of price gaining

and

b) gives bulls who haven’t entered a chance to get in prior to the breakout

This is followed by a strong breakout bar at B. This large bar should be curious, for why would bulls buy up so strongly heading into a resistance level if they were worried about sellers parked there. Usually, institutional traders can smell an upcoming breakout like this, so will push really hard to take out any stops as they go after the barrier.

A “strong breakout bar” is usually a really good sign the breakout will continue as it means stops were tripped above the resistance level, and price jumped aggressively in one bar. More ideal is if it has a good “clearing distance“, for if it does, then it increases the chances all the stops were tripped by going further away from the resistance level where most of the stops were near.

Tripping The Stops
It is this latter part – the stops getting tripped, which helps fuel the breakout even further, because those bears who were short now have to buy back, and this buying back to exit out helps further fuel the upside breakout. This is why if you ever watch the prices on your actual platform during a breakout like this, it generally reads (using 4 decimal places);

1.2999
1.3000
1.3001
1.3002
1.3003 (stops tripped)
1.3006!

You can always tell where the stops were parked and tripped, because price then jumps a few pips in a shot. The reason for this is – there were no sellers between 1.3003 and 1.3006, meaning the brokers could not print a price there since there were not enough orders there to hold that price. The stops being tripped at 1.3003 were sellers who now had to buy back, and when they did, they helped to push the next market price up 3 pips in a single tick or print.

When you see this, it usually means the breakout will likely continue – as long as you have done your pre-qualifying ahead of time.

One Final Note
Like all things, we have to pre-qualify a forex breakout using several price action characteristics ahead of time. The ones listed above are just a few of the ones we use in my Course, and there are several others which will clue you off and enhance the probability of the breakout being successful or not.

When you can pre-qualify them correctly, you will find breakouts quite easy to trade and accuracy levels around 60-70% as this is what my more profitable students are doing consistently just trading breakouts.

But, you have to pre-qualify them, like any price action setup. We never just trade them in isolation, as we are not pattern traders. We are price action traders, and we always trade setups & price action in context.

Any good system can perform badly without the proper context. Pin bars can be a highly effective system, if traded in context. But without understanding the type of trend, or volatility levels, you will likely lose money trading pin bars in isolation, even if you trade them at key chart levels.

Thus, we are never just trading patterns on a chart. We are always trading them in context, and this is exactly the same for breakouts, so always pre-qualify them ahead of time.

Look for the three characteristics above, try to trade them with trend more often then counter-trend, and you’ll find they can offer highly profitable trades, with some of the better reward to risk ratios out there, such as 3, 4, 5, or many reaching 7 or 9:1 reward to risk ratios.

Forex Strategies, Trading Mindset & Risk Management

What You Need to Do to Make Money Trading (Part 1)

Happy New Year of the Snake!

NOTE: For this new year, I’ll be writing a blog post and article every day of the trading week to launch the Chinese/Tibetan New Year off with verve.
Today’s article is about what you need to do to make money trading (consistently). Did you know about 35% of all retail participants make money trading? This is true, but what you need to know is in the details, that ~half of them (17.5%) make money on back to back quarters, and ~half of them (7.5%) make money on multiple back to back quarters.
This should communicate to you consistency is hard to achieve in this market, however it can be done. But you have to do some key things to make money consistently. In reality, there are many things you have to do, but these two things are critical to make money trading consistently.
So what are these two things?
I can sum them up into two words: Getting Comfortable.
Yep, that’s right – getting comfortable.
What this implies is really twofold;
1) Getting Comfortable with Uncertainty
2) Getting Comfortable with Yourself
I’ll briefly talk about the first one today, and tomorrow dive into the second. But i’ll begin with why the first one haunts beginning traders.

Getting Comfortable with Uncertainty
When you look back on a chart, everything seems so clear. You can see where your price action systems made winning trades. You can see why that key support and resistance levels held, why it was a great time to get in, why the trend was going to continue, or reverse. It’s all so clear…after the fact, and it always will be.
Why?
Because right side of the chart represents uncertainty, while the left cannot be altered. Our brains are so hard wired to look for structure/patterns/order, that any chaos, lack of structure/solid ground is unnerving for us. The reality is, we are used to setting up our lives for predictability.
We often look for jobs that have the same schedule, the same pay, the same rules – all predictable for us to plan and live our lives.
Trading forex professionally is just the opposite and requires us to re-wire our neural programming.
It guarantees no return, no fixed salary, no predictability. It is a constant sea of uncertainty we are swimming in. The only thing that allows you to make profit, is you learning to make consistently good decisions (being disciplined, following your system, managing the trade well). But to do this, you need training, practice, and to get comfortable with not knowing what is next.
Ever Flowing River
The money is there to be made, and you sense this…you sense the potential. You just have to learn how to make it. But first, you have to get comfortable with uncertainty.
Much of developing a successful trader mindset is getting comfortable standing in the ever flowing river of uncertainty. It is standing at the precipice on the waterfall into the next moment. This river, or waterfall, is often referred to as the ‘right edge of the chart‘. But in reality, it is the absolute potential of the next moment.

Most of The Time
For most of the time you will be trading and sitting in front of the charts, there will be less clarity, and more uncertainty.
If you get anxious, feel pressured, upset, or worried not knowing whether you will make money on your current trade, then you will likely make a bad decision. These often lead to losses as you probably have experienced already.
But if you can get comfortable with this uncertainty, and comfortable with losses (which are inevitable), then you will find yourself making good decisions more often than not.
Good decisions lead to better trades. And when you start doing this consistently, the money will come. The destination will always take care of itself, but the process from here to there is what you can influence.
Ask yourself which end of the statistic of profitable traders you want to be on, then ask yourself what you are willing to do to get there.
Kind Regards,
Chris Capre

Forex Strategies, Price Action Trading

Price Action Angles – Trading Forex Price Action

I wanted to write a brief article on a simple method I use to analyze price action – that of drawing trend lines to read the forex price action angles, or the speed of the buying/selling in the market.

I’m going to use an example to highlight how they can be useful for understanding trends, transition phases in trends, and when to look for key price action reversals in the market.

Exhibit A: EUR/USD Daily Chart

Looking at the forex price action trading trendline chart above, the EURUSD started 2012 dipping to 1.2600 before starting an impulsive bull run which climbed almost 900+ pips in a month and a half. Now if you look towards the left side of the chart, you’ll see a pullback to the horizontal line. Price rejected off this line, forming a piercing pattern that climbed 6 out of 7 days and over 500+pips.

This is the move in line A.

After reaching the peak from move A at about 1.3500, price then sold back in 11 days back towards the same support line. Although the low from this sell-off was a tad higher, take a look at the bounce off the level.

Notice how it had 3 bear days in the 8 day move (2 more than in prior move), but only went about 400pips (20% less)?

To me, when I see two rejections off a key level, I’ll draw trend lines on both of them (underneath if they are bull moves, and above if they are bear moves). The reason I do this is to measure the strength or speed of the buying/selling. This is communicated to me by looking at the price action angle of each trend line.

In this case, I have a weakening angle from A-to-B. This communicates a weakening effort by the bulls and that the bears are trying to take control of the market. Keep in mind, this is all happening above a support level, so the bulls still have overall structural control.

When you however look at the last bounce off this noted support line, we can see a massive weakening in the angle. When I see three structural, or price action angles weakening successively, this usually is a sign of an impending breakdown. What is also interesting is the C leg took 12 candles to gain only 250pips (50% less than A-leg, and 38% less than the B-leg). Put these two together, and you should be looking for a breakout to the downside.

What is interesting is how price action formed a pin bar strategy off this key level. If you were just trading pin bars as is, without the ability to read price action in real time, you would have taken the long on this pin bar setup, but then got crushed on the ensuing breakout which is below.

Exhibit B: EUR/USD Price Action Angle Weakening/Trend Change

Working with this chart above, we can see how even though there was a pin bar setup at the horizontal support level, price dropped right through that – stopping out traditional pin bar traders who were not reading the price action in real time, or the change in the angles.

In a flash, the trend was reversed and the pair sold off over 600+pips in less than a month. Had you been reading the price action angles in real time, you would have spotted this potential trend change, and looked to get short instead of longing off the pin bar setup.

This is one way to use forex price action angles to help with your reading and understanding price action.

Another way you can use them is in understanding parabolic or climactic price action moves. These can also be understood via these trend lines and angles. But they are a simple tool which is highly useful in forex trend trading, understanding transition phases in trends, and when to look for possible reversals.

I hope you enjoyed this article and found it a useful addition to your price action trading toolbox.

For those wanting to learn to trade price action, get access to the traders forum, a lifetime membership with free updates and more, visit my forex price action course page.

Forex Strategies, Price Action Trading

2 Key Clues to Understanding Support and Resistance Levels

While my trading team and I are mostly on vacation for the month of July, I wanted to write a brief article giving 2 key clues to understanding forex support and resistance levels, which is also a follow up to my prior article the best support and resistance levels part 1. If you can learn to understand these two key points, you will be able to detect key levels, when they are more likely to hold, and when they are more likely to be broken.

1) Prior History, Time Degradation, & Reactions to Key Levels in the Past
When analyzing to see if a level is one where traders are more likely to place trades around, we have to see how price reacted to those levels in the past.

Did price react very strongly to it in the past, say approach it one time, then reverse sharply off of it? If so, then its very likely the next time it approaches that level, traders will place orders around there expecting a similar reaction.

Why?

If price produced a very violent or strong reaction to it in the past, this was because a large amount of money was put on the line stating ‘this is the line in the sand, this is highly over-valued or under-valued and we are placing a large bet here’. When this happens, its the first institution to get in that has the highest chance for profit, because they are the first to try and reverse the pair, thus getting the best price. But they also carry the most risk.

Regardless, if their reversal attempt works, other institutions will catch wind of this, and attempt to get in as close to the rejection level as possible. It really becomes a race between the institutions who can get the best price so many vie for it. This helps to further fuel the rejection and create a stronger reaction.

Smart traders take note of this level producing such a strong rejection and will more than likely take a play off of it a second time expecting it to hold. If an institution placed a large amount of money at a key level, they will likely defend it a second time (along with others as well). So expect this level to hold.

But…the reaction the second time around is usually not as strong.

Why?

Because more people are aware of it the second time. If it was a support level that produced a violent bounce, the second time around the sellers heading into that level will take profit. This means there is less of an opposing force on the sell side, so when the market bounces, there are less sellers who have to exit and thus fuel the counter trend play.

A good example of this is below in the daily Gold chart

Chart 1.1 Gold Daily

Gold was in a strong uptrend for all of 2011, eventually reaching $1900 an oz after climbing 3 out of every 4 days from July into mid August. Looking at the chart above, gold sold off quite heavily after reaching the $1900 level, selling off almost $200+ in 3 days.

Notice how the second time it approached this level, it held, but took over 13 days to sell off the same $200 amount. The first reaction was far more violent, while the second more tempered. The level held just fine, but when you see these situations, expect the response to be not as violent but still providing a great trade opportunity.

So anytime you see violent reactions to a level, look to place a trade at that level, expecting it to hold and produce a similar measured move. Obviously, if the reaction happens on a higher time frame, there is a greater chance it will produce a similar reaction. Whereas on a lower time frame, this will probably be less likely so be a little more choosy when looking to make a play like this.

Other factors to consider besides the strength of the reaction when understanding support and resistance levels is if the level produced a breakout pullback setup, has held several times in the past, and how much time the market spent at those levels. All of these factors will determine if there is a good setup there at that level.

2) Current Price Action
So often when people talk about levels, they only focus on the past and seem to forget to look at how the price action is behaving in the present. Just because a level held nicely in the past doesn’t mean it will this time and you’ve probably experienced this, expecting a level to hold only to watch it get broken.

By learning to read the price action in real time, you can see if the market is approaching it with strength or weakness, impulsive-ness or corrective-ness, and then use this information to determine if a level will hold the oncoming assault or buckle forming a breakout or trend continuation.

Levels are just areas where traders place orders, but if the defenses of those levels are weak, they will not withstand the attack, so it is crucial you are always watching price action in real time to determine if this will hold.

Although I place my orders at key levels I think will hold, if the market is approaching it with several signs of strength, then I will consider waiting for a price action trigger at this level, or for it to hold before placing my order.

Below is an example of a key level that held in the past, but completely failed the second time with the market showing strength and signs it was going to fail.

Chart 1.2 EURUSD Daily

When the EURUSD started its massive sell off in late April, it did so in impressive fashion shedding over 600pips in 13 days with only one bull candle in the entire selloff. When it was approaching the yearly low (at B on the chart) around 1.2627 in 2012, notice how the selling started to pause going from really large impulsive candles to two small doji-like candles. The transition or change from large candles to small suggested hesitation on the sellers part heading into a key level they suspected might hold.

This weakness and hesitation was a good real time price action clue the market was likely to produce a bounce from the yearly low, and bounce it did, forming an engulfing bar which bounced about 150pips in two days. Many of our price action traders got in on this one, not only reading the weakness, but also using quantitative data on price action specifically for the EURUSD which communicated a likely reversal.

But notice what happens after a two day bounce – price then sells off aggressively again taking out the prior days lows and eating into over 75% of the two days’ gains. This communicated to us in real time the sellers came back in force and were making an aggressive attempt to take out the level. So this was a good price action clue not to place another buy order at this level.

Notice how after it broke, the level served as a key role reversal level which gives us an opportunity to get short and join the trend.

There are many other clues one can use to read the price action in real time to determine if the level will hold or break, but these are just a few hints you can look for, along with looking for price action triggers off these key levels and quantitative data to support your level as well.

In Summary
So these are just 2 key clues you can use to understand forex support and resistance levels. It is critical to understand specifically how the market responded to a level in a past to determine first if it is a good level to make a play on.

But, so many times I hear traders talking only about how the market reacted in the past, and not paying attention to how the price action is developing in the present – which is a real time communication to the underlying order flow behind the attack on the support or resistance level. By learning to read this, along with level 2 quotes, you can greatly increase your ability to understand and place trades around key levels, either using them for reversal plays, breakout pullback setups, or looking for potential breakouts around these key levels.

For those wanting to learn to trade price action and understand resistance and support levels, get access to the traders forum, quantitative data on price action, lifetime membership & more, visit my forex price action course page.

Tag Archive for: support and resistance levels

How To Find The Stongest Support & Resistance Levels

The Mindset Around Key Support & Resistance Levels

How To Find The Strongest Support And Resistance Levels (in all financial markets)

What Other Variables Should I Be Looking For When Picking My Key Support And Resistance Levels?

In Summary

The Blind Entry (How It Will Leave You Trading Blind)

Preface

The Critique On The Blind Entry

In Closing

Price Action, Breakouts & Order Flow

What You Need to Do to Make Money Trading (Part 1)

Price Action Angles – Trading Forex Price Action

2 Key Clues to Understanding Support and Resistance Levels

Stock Trading

Options Trading

Trading Courses

Legal