How to Mark Support and Resistance.

In forex trading, technical analysis support and resistance are the number one and basic subject to know. For trade entry and exit, trade profit target, understanding market condition, like breakout, position , market ranging or trending all are analyzed by support and resistance. Maximum forex profitable strategies are built on support resistance bias. So, how to mark support and resistance properly is a primary and basic lesson for a new forex trader.

Support and resistance levels are an extremely important concept in technical trading. A support level is a price level where the next financial instrument faces increasing buying pressure i.e. supply pressure. Support levels are typically prior swing lows in the price but can also be Price Levels located on technical tools such as trendlines channel levels or fibonacci levels. If a price falls below that level of support there is a good chance that level would become a potential support level in the future. A pullback occurs when the price reverts to its previously broken levels only to continue to advance in the breakout direction in the subsequent direction.

What is support and resistance:

Economists have said “where there is a market there is a game of supply and demand’’. All markets are driven by supply and demand. Forex is a big financial market in the world. So, this market is also moving by this common economical concept –supply and demand. When we are looking for a demand level in the forex market then we meet the level which another name is support level. And when we looking for supply level we find out the level name is resistance level.

Now we discuss about word meaningly about support and resistance. Why its calls support and resistance? First time we are clarifying about support. It calls support because, when something or somebody falls down, then it’s or he wants to stand up helping by another thing or anybody. So, when price falls down then the market price returns back and goes upward direction by supporting this certain price level. This price level supports price for go up for this the price level calls support level.

Resistance means when something grows up then which thing makes its stop to know extension. It is an obstacle or against work. When market price moves up then the certain price level makes its stop to no more go upward direction. This price level resists the price to go up. For this the price level calls resistance. Now we are trying to give a definition of support and resistance in a technical view. About support definition we can say that, support is a price level where buyers enter the market, and buyer gets control of the market. As a result the market started to go upward. About resistance definition we can say that, it is a price level where sellers enter the market, and get control of the market. Then the market started to fall down.

This support resistance level is a pre-selected or pre-marked historical level. Prices respect the historical level again and again. Prices come to this level and bounce back in the opposite direction. This historical price level occurs from many years. Many months. Many weeks, many days. We consider support as floor and resistance as a ceiling. In support and resistance there is a basic rule. It’s when a support level breaks through it becomes resistance and when a resistance level breaks through it becomes support. Actually old support becomes new resistance and old resistance becomes new support. There are two types of support and resistance, major or key support resistance and minor or shorter support resistance.

In view of origin we can mention more variation of support resistance, classic or horizontal support resistance and dynamic support resistance. Must mind it that it supports resistance not a single price number or line. Its price level or price zone. More tested the price level more the level strongest support resistance.

 

 

 

 

 

 

 

Major/Key support resistance level:

We mentioned previously that two types of support resistance one of them is major or key support resistance level. To recognize major support or resistance levels is the main task of support and resistance marking. It’s very important to know. All market participants like banks, financial institutes, professional traders are hugely respected at this key support and resistance level. Because a big market movement occurs from this level. How we recognize major or key support resistance level mentioned below:-

1.     This support resistance level is so old. It continues to respect the level from many years, many months, many weeks, many days.

2.     Price test or respect the level more and more times or again and again. And it’s repeated.

3.     A big market move is created from this level.

4.     We see an obvious, clear and big swing high and swing low in this level.

5.     When we break through this level we see by a big and high-volume candle break through this level.

Minor/Short terms support resistance:-

Minor support and resistance are fully short terms and recent respective price levels. It repeats very few times, most two or three times. Price can break through this level easily.

Support resistance zone:-

In support resistance, it is very important to know about the support resistance zone. This price zone is very potentially profitable. Many high probabilities trades have gotten this price zone. We discussed previously when support breaks through it becomes resistance also when resistance breaks through it becomes support. So which price zone acts as support and resistance combinedly this called support resistance zone. For recognizing this price zone, we see price where there first time its support level then break through this level and then price respects the level as a resistance. As same when a resistance level breaks through and again this level price respects as a support level. So what happens in those levels is called the support resistance zone or S/R zone.

 

Dynamic support resistance-

Generally horizontal classic support resistances are popular. It’s marked by recent price swing low as support and recent swing high level as résistance. It’s also horizontal level. But there is another way to mark support resistance. Like as moving average, Fibonacci retracement level etc. And this type of support resistance is dynamic support resistance.

How to mark support resistance

Now we come to the real and main subject. It is how to mark support resistance. For doing profit it has no alternative. How much you mark support resistance properly as you are a profitable trader. So very curious about this.

Now we give you some description about  how to mark support resistance.

In support resistance marking you first see the price chart. And take recent price bars. Then you see the recent price swing high for resistance and recent price low for support.

 

 

 

 

 

 

Easily you do this if you mark the “v” shape for support. And  “^”(mirror image of V) for resistance.

You connect the recent two or more swings low and high  by a horizontal  line. But in the candlestick pattern chart you must mark on the candle high for resistance and candle low for support. This type of support resistance marking is a very common and effective way. Most professional marks support resistance by this way. There is another way to mark support resistance. It is done by trend line. You connect the price swing low by a trend line for support and connect swing high for resistance.

 

But we suggest and prefer to mark support resistance by the first way by horizontal line .

It is a confusing question. Which chart we can take for marking support resistance? Which time frame chart is best. We suggest the daily time frame chart is best. Weekly chart is very best for key support resistance label marking. Many professional traders are marking support resistance labels by the combined weekly and daily time frame.

Conclusion:

How to mark support resistance properly is a sensitive factor. By practicing properly on traders can skill full in this purpose. For profit in forex a trader must have a trading strategy. It is a very proven profitable strategy in the world. Forex pairs are bought at support in an uptrend and sold at resistance in a down trend. There is a another profitable forex strategy is break out strategy. On trader can catch big market movement in this strategy. support resistance breakout strategy is the most popular forex profitable trading strategy. It is very dangerous for forex trading to sell in support and buy in resistance. If you don’t know how to mark support resistance properly you can do this mistake. For to be skill full in support resistance marking properly, do practice more and more.

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