Forex Trading Strategy "Support and Resistance"

Forex Trading Strategy "Support and Resistance" - a widespread trading system based on the horizontal support and resistance levels. These levels are formed by highs and lows of candles. The breaking of these levels after a period of consolidation signals the beginning of a trend. This strategy does not require any graphical indicators, except the opportunity to draw the line (at least in imagination).

Features

• Well defined low level of stop-loss.
• The relatively high percentage of profitable positions.
• Fuzzy target levels.
  

How to trade?

1. The level of support is formed by at least 2 or more candles, which form a fairly straight horizontal line, without the lower levels between them.
2. The level of resistance is formed by the maxima of 2 or more candles, which form a fairly straight horizontal line, without the higher levels in between.
3. Consolidation - a period without any trend, which is formed near the level of support or resistance, with a relatively small bodies of candles.
4. Closing below the level of support indicates a short position.
5. Closing above resistance signals a long position.
6. Stop-loss is set at minimum (low) the previous candle for long positions, or - on the maximum (high) for the previous candle's short positions.
7. Take-profit can be set relative to the stop-loss or any trailing stop.
   

Example
Support:

Resistance:

On both charts, examples, clearly visible during the consolidation period. In both cases, support / resistance level is formed by two candles in a relatively short period of time. Stop-loss is set close to the level entrance. Take-profit could not be clearly established at the time of entry, but easily could have used the relation 1:2 risk to reward. If you are experiencing difficulties in determining support and resistance levels, you can take advantage of our free indicators for MT4/MT5: Support and Resistance or TzPivots.

Attention!

Use this strategy at your own risk. EarnForex.com not responsible for any damages that may result to you when using any strategy presented on the site. It is not recommended to use this strategy on a real account without testing it to start a demo account.