Wondering where good support and resistance is? Forget using one of those automatic indicators, they can be far wrong, instead draw them yourself and you will find your supports and resistance areas will be much more effective especially when combined with price action or indicator trading. I believe an image says a thousand words so i will show it step by step, image by image, so we can follow along how easy you can add these lines to your chart as well.
Plus as a bonus I will throw in some ways to trade them using easy to see price action as well.
Open Chart Software
Firstly to draw the best support and resistance lines we first need to open our chart software. Whatever charting software you use should be the same, I use mt4 because i find it is very easy to use. To start i will open a blank chart of the Euro / Usd. Open it to the weekly time frame first.
Please note – This is a daily or H4 trading strategy that has a very high success ratio and has been tested multiple times. To see a larger view of any of the images below just click on the image however remember to open in new tab or window in order to get back to this post.
Step 1 – Above is the Weekly of the Euro Usd – Totally Blank with No Indicators
Step 2 – Change to Line Chart on Weekly – This can be done by selecting line chart at the top pf mt4, if you have another charting software the option should be somewhere.
Draw the Lines – Simply line up where price hit and then changed direction more than 2 times. These will be the weekly support and resistance lines, they are very strong indicators of where the market will most likely turn. They should not be ignored and they should be the areas of where we trade.
Draw Lines on Daily As Well – I usually make these another color so i can distinguish between daily resistance zones and weekly.. Red are daily lines here.
Switch Back to Candles – When you switch back to candles you will now see the nice support and resistance lines to look for trading opportunity. By waiting for these lines we can effectively increase our probability of success tenfold. To put it simply at resistance lines we look for Price Action indications to sell and at support we look for Price Action spots to buy. If they do not show then we simply do not trade.
Examples of Trades on Daily – The above image shows areas of interest and where to get into the market and where to get out.
How to Manage a Trade? – Above image example shows where to open and place a stop loss and where to adjust to breakeven and where to take profit. This is a very successful formula after a signal is presented.