The support and resistance forex trading strategy are one of the most popular forex trading strategies used by thousands of traders worldwide.
Support and resistance levels trading forms the main thing of many forex trading strategies on this website.
Trading support and resistance levels are straightforward:
- identify resistance levels, and if the price head up to that resistance level again, look for an opportunity to sell.
- Identify support levels and if the price heads down to those support levels, look for a chance to buy.
Currency Pairs To Trade?
You can use this fx trading system to trade any currency pair.
Which Timeframes To Trade
You can trade any forex timeframe, but I suggest using a 15minute timeframe and above.
Are any forex Indicators Required?
This is a 100% price action forex trading system; no forex indicators are required. All you need is a good eye to identify forex support and resistance levels in whatever chart timeframe you are trading.
Support And Resistance Forex Trading Strategy Rules
Strategy Buying Rules:
- Once you have identified a chart support level and if you see the price heading back down, wait for the chart price to hit that level.
- After the price hits that level, see if you can see a bullish reversal candlestick pattern.
- Put a buy stop pending order two pips above the high of that bullish chart reversal candlestick pattern.
- Put your stop loss(SL) 5-10 pips below the low of that bullish reversal candlestick pattern.
- To take profit, you can use previous swing highs or calculate it based on a risk: reward ratio of 1:3
- identify your resistance level and see if the price head backs up to that resistance level.
- Place a sell stop pending order two pips below the low of the bearish chart reversal candlestick pattern.
- Place your stop loss(SL) 5-10 pips above the high of that bearish reversal candlestick pattern.
- To take profit(TP), use previous chart swing lows or calculate it based on risk: reward(R: R) ratio of 1:3
Advantages of The Support And Resistance Level Forex Trading Strategy
- This is one of the few forex trading systems with an excellent risk: reward ratio. You can get R: R of 1:10 and above, and one well-placed trade followed by a strong market trend can increase your trading account by 50% to 100% or more, and it depends on how long you can ride it and your profit target(s).
- This forex trading system is based on the solid trading fundamentals of support and resistance levels. It is easy to predict early with the help of reversal chart candlestick patterns where the market is most likely to head.
- Straightforward trading rules anyone can follow.
Disadvantages of the Simple support and resistance forex trading strategy
- Support and resistance chart levels are not lines drawn in concrete. They do get broken at some points down the line.
- Support and resistance levels are not specific chart price levels; they need to be considered as zones because sometimes the price will not come down to the EXACT chart level as before and start to turn.
- New forex traders may have a bit of difficulty in identifying genuine support and resistance levels.