What is support and resistance
Support and resistance are two concepts which are very important into a price action strategy and forex (foreign exchange) market. These concepts stays at the base of technical analysis and without them it’s almost impossible to develop a successful trading method.
We call support, a price level when we expect the price to bounce. We can compare support with a floor which sustain the price and prevent it to drop more.
The resistance, is a price level where the price encounter some difficulties in growing more into an uptrend. We can also compare the resistance with a roof which stops the price to go more into the upside.
How can we mark support and resistance on the chart
For intraday trading we use one hour chart (H1) to mark the support and resistance.
There is a very simple way we can do this. In Meta Trader 4 or Meta Trader 5 we press ctrl (for Windows) / cmd (for MacOS) + y and now we can see the quadrants. We will see on each quadrant all the candles contained in a single day.
All we have to do in this moment is to mark with a vertical line the highs and the lows from the past 3 – 5 days. After we do that we can easily see where the price have room to move and where the price struggle to move.
Here is a video where I explain how you can do it: https://youtu.be/weWoacGvsw8
How we trade using support and resistance
We can’t trade only using this concepts because those are not enough to provide us constant profits. We need to make sure we have some additional confirmations from other tools like Fibonacci levels and candle stick patterns before we place our entries.