Simple Support And Resistance Trading Strategy
How do you trade support and resistance levels?
You do technical analysis of charts to find levels where the price previously find support or resistance and then enter at these levels on a buy or sell signal.
In this post, I give you a simple support and resistance trading strategy.
It's an easy to use and profitable strategy if you trade it correctly.
You must understand these basic trading principles on support and resistance levels if you want to become a successful day or swing trader.
how to find support and resistance levels
- You want to look for recent highs and lows.
- Draw horizontal lines at these zones.
- Zones above price will act as resistance and zones below price will act as support.
- Trade in the direction of the trend.
- When resistance levels break (uptrend, new highs are formed), you want to enter on the first test of support zone.
- When support levels break (downtrend, new lows are formed), you want to enter on the first test of resistance zone.
how to find key levels in Trading
support and resistance Zones
Supply and demand are the cause of these support and resistance levels and though they are easy to spot, using this simple trading strategy or building your trading plan around these levels will give you the best trading strategy you can have.
You can use the techniques in this strategy to improve the edge in your current strategy or find a way to use that fits your trading style.
Remember that levels are not exact and a good way to look at them like zones.
When you set your stop loss, you will not place it just below to level but rather adjust the position size down and place a bigger stop loss.
support and resistance charts
USDJPY daily chart by TradingView
GBPJPY daily chart by TradingView
Other technical analysis strategies to find good support and resistance levels are Fibonacci retracement levels and trendlines (sloping support and resistance levels).
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I'm a family guy in my early 30's who learned how to trade the markets in a simple yet effective way. During university, I studied investing and graduated with a master's degree in risk management. Quickly, I realized that I was onto something. I started helping friends and taking students. My students started getting results, spent less time in front of their screens, and their accounts grew consistently. Learn more about me here.
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