Forex auto support resistance and trend line system – This is a simple way to identify Support-Resistance and Trend-Line in Forex trading.
“SUPPORT and RESISTANCE” is common jargon for areas on the chart where the price has a difficult time breaking through.
Support levels tend to stop price from falling below a specific point and resistance levels act like a price ceiling that price cannot break above.
Knowing where these levels make it much easier to decide when to open and close trades, but how can we locate these prices, to begin with…?
The great way to find support and resistance levels is to mark levels in the past where price had a difficult time breaking through.
As price moves up and down, each level that price has bounced off of could be a level in the future that price bounces off of again.
This is a manually intensive method and takes time to draw on all the currency pairs that we trade, but can pay off in the long run.
Auto Support-Resistance indicators are good tools to help us draw support and resistance area automatically and accurately.
In an UPTREND, the price makes higher highs and higher lows. In a DOWNTREND, the price makes lower lows and lower highs.
Connect the highs and lows during a trend.
Then, extend that line out to the right to see where the price may potentially find support or resistance in the future.
These simple lines highlight trends, ranges, and other chart patterns.
They provide traders with a visual of how the market is currently moving and what it could do in the future.
MINOR support and resistance levels are expected to be broken.
Minor support or resistance provide analytical insight, and potential trading opportunities (discussed later).
MAJOR support and resistance are price areas that have caused a trend reversal recently.
If the price was trending higher and then reversed into a downtrend, where the price reversed from is a STRONG resistance level.
Where a downtrend ends and an uptrend begins is a STRONG support level.
When the price comes back to a major support or resistance area it will often struggle to break through it and move back in the other direction.
When buying, place a stop loss several cents below support, and when shorting place a stop loss several cents above resistance.
Consider waiting for some CONFIRMATION that the market is still respecting that area. Take a look at the image below.