Support Resistance Reversal Trading Strategy
How to identify trend reversals doing simple technical analysis of support and resistance levels and following non-lagging reversal signals.
You can use this strategy on any market and time frame.
How To Find Support And Resistance
The best way to find support and resistance is with some simple technical analysis strategies.
First, look at tops and bottoms.
You should easily find the highest high and lowest low on the chart.
Next, are there any tops and bottoms (resistance and support levels) close to the same price level?
You can use a line chart to easily spot these resistance and support levels.
Support And Resistance Levels
Horizontal support and resistance levels are more important than trendlines.
Why is that?
It's because horizontal support and resistance is easy to spot so more traders will see the same level.
Trendlines can be drawn in many different ways.
So depending on which tops or bottoms are connected to create the trend line.
You will get very different support and resistance lines on the chart.
Support Becomes Resistance
Chart patterns like trend channels, pennants, flags, etc. create support and resistance levels.
When price breaks out of a bearish chart pattern (it will often break out in the direction of the higher time frame trend), the level that acted as support inside the chart pattern will become resistance.
For example:
You have a channel and price break the support level. If if price starts rising again you want to watch the old support level closely. Because if you get a 10X sell signals here, you have a high probability trade.
Resistance Becomes Support
Like bearish chart patterns becomes resistance when price breaks out.
Bullish chart patterns becomes support when price breaks out.
For example:
You have a flag and price break the resistance level. If if price starts declining again you want to watch the old resistance level. Because if you get a 10X buy signals here, you have a high probability trade.
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