Support And Resistance

Support and Resistance in Forex trading are levels where price is expected to reverse or bounce. They are simply “price turning point” levels. The support (demand) and resistance (supply) levels are areas where price is rejected once or in multiple times. Identification of support and resistance forms part of the technical analysis.

Support is known as the floor where price touch and bounce off in response to market demand, while resistance is the ceiling where price touch and bounce off in response to market supply. Support or resistance line can be drawn on any time frame, whether on 1-minute chart or 1-month chart. However, some of the support or resistance lines remain valid for years.

 

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Support And Resistance Chart

EURCHF: 1.14793 IN SIGHT, MORE UPSIDE EXPECTED – 1 HR CHART (5 NOV 2018 22:11 GMT) Price is currently at 1.14551 area and may retest the resistance at 1.14793 before another higher resistance level at 1.15000 psychological area. On the other hand, the price may touch the support at 1.14453 before dropping further to the 1.13919 support.

Support

 

EURGBP: 0.87193 IN SIGHT, MORE DOWNSIDE EXPECTED – 4 HR CHART (5 NOV 2018 21:49 GMT) Price is currently at 0.87449 area and may retest the resistance at 0.87752 before another higher resistance level at 0.88111. On the other hand, the price may touch the support at 0.87193 before dropping further to the 0.86942 support.

Support

 

NZDJPY: REJECTED AT THE 75.600 RESISTANCE AREA, MORE UPSIDE EXPECTED – 4 HR CHART (4 NOV 2018 18:51 GMT) Price is currently at 75.139 area and may retest the resistance at 75.600 before another higher resistance level at 75.942. On the other hand, the price may touch the support at 74.769 before dropping further to the 74.436 support.

Support

 

USDCAD: TESTED THE 1.31216 RESISTANCE AREA, MORE UPSIDE EXPECTED – 1 HR CHART (4 NOV 2018 16:07 GMT) Price is currently at 1.31020 area and may retest the resistance at 1.31216 before another higher resistance level at 1.31446. On the other hand, the price may touch the support at 1.30730 before dropping further to the 1.30483 support.

Support

 

USDCHF: TESTING THE 1.00366 RESISTANCE AREA – 1 HR CHART (4 NOV 2018 15:33 GMT) Price is currently at 1.00296 area and may retest the resistance at 1.01008 before another higher resistance level at 1.01422. On the other hand, the price may touch the support at 0.99770 before dropping further to the 0.99146 support.

Support

USDJPY: TESTING THE 113.350 RESISTANCE AREA – 1 HR CHART (4 NOV 2018 15:21 GMT) Price is currently at 113.174 area and may retest the resistance at 113.597 before another higher resistance level at 114.079. On the other hand, the price may touch the support at 112.897 before dropping further to the 112.693 support.

Support

GBPUSD: TESTED THE 1.30500 RESISTANCE AREA – 1 HR CHART (4 NOV 2018 8:23 GMT) Price is currently at 1.29603 area and may retest the resistance at 1.30500 before another higher resistance level at 1.30960. On the other hand, the price may touch the support at 1.29225 before dropping further to the 1.28504 support.

Support

EURUSD: KNOCKED DOWN BY BEARS AT THE 1.1450 RESISTANCE AREA – 1 HR CHART (3 NOV 2018 17:18 GMT) Price is currently at 1.13856 and may test resistance at 1.14348 before another higher resistance level at 1.1493. On the other hand, the price may touch the support at 1.1336 before dropping further to the 1.1302 support.

Support

EURUSD: 1.1400 SUPPORT RETESTED – 1 HR CHART (28 OCT 2018 06:32 GMT)

Support

 

AUDUSD: 0.7040 IN SIGHT – POSSIBLE SELL – 1 HR CHART (22 OCT 2018 23:51 GMT)

Support

 

GBPUSD: DOUBLE TOP -1.2924 IN SIGHT – POSSIBLE SELL – 1 HR CHART (22 OCT 2018 23:37 GMT)

Support

 

GBPJPY: POSSIBLE SELL – 1 HR CHART (22 OCT 2018 23:27 GMT)

Support

After

Support

 

EURUSD: 1.1531 IN SIGHT – 1 HR CHART (1 OCT 2018 15:46 GMT)

Support

 

EURUSD: 1 HR CHART (30TH SEP 2018 22:02 GMT)

Support

 

EURUSD: 1.1610 SUPPORT IN SIGHT –  1HR CHART (THUR 27 SEPT 2018 20:37 GMT)

Support

 

USDCAD: 1.3066 RESISTANCE IN SIGHT –  1HR CHART (WED 26 SEPT 2018 22:37 GMT)

Support

 

EURUSD: ANOTHER REJECTION AT THE 1.18 RESISTANCE AREA. 1HR CHART (MON 24 SEPT 2018 17:58 GMT)

Support

 

USDCAD: MAKING ANOTHER ATTEMPT AT THE 1.296 RESISTANCE AREA. 1HR CHART (MON 24 SEPT 2018 15:14 GMT)

Support

 

EURCHF: RESISTANCE IS BROKEN. 1HR CHART (MON 24 SEPT 2018 15:08 GMT)

Support

 

USDJPY: CONSOLIDATION. 112.40 – 112.70 RANGE IN VIEW. 1HR CHART (MON 24 SEPT 2018 15:05 GMT)

Support

 

GBPJPY: REJECTED AT THE RESISTANCE. POSSIBLE H AND S FORMATION. 1HR CHART (MON 24 SEPT 2018 14:45 GMT)

Support

 

USDJPY: THE BEARS ARE ON THE RUN! 112.13 IS NOW BEHIND. 1HR CHART (THUR 20 SEPT 2018 15:49 GMT)

Support

 

AUDUSD: INVERTED HEAD AND SHOULDER IN PLAY, 1HR CHART (THUR 20 SEPT 2018 14:45 GMT)

Support

 

EURUSD: THE BULLS HAVE 1.1792 IN SIGHT 1HR CHART (THUR 20 SEPT 2018 12:25 GMT)

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GBPUSD: THE BEARS ON THE RUN! RESISTANCE FAST TURNING TO SUPPORT 1HR CHART (THUR 20 SEPT 2018 11:01 GMT)

Support

 

 

EURUSD: THE BATTLE FOR THE 1.1720! – THE BEARS AND THE LAST STAND! 1HR CHART (THUR 20 SEPT 2018 09:40 GMT)

Support

 

USDJPY: BULLS AT THE 112.13! – 1HR CHART (THUR 20 SEPT 2018 06:42 GMT)

Support

 

USDCAD: NO WAY UP! BLOCKADE UP HILL – 1HR CHART (WED 19 SEPT 2018 18:30 GMT)

Support

 

EURUSD: THE BATTLE FOR THE 1.1720! THE BEARS ARE NOT GIVING UP THE FIGHT, AS THE BULLS CALL FOR BACK UP – 1HR CHART (WED 19 SEPT 2018 18:13 GMT)

Support

 

 

 

GBPCAD: TESTING SUPPORT – POSSIBLE DOUBLE TO FORMATION – 1HR CHART (WED 19 SEPT 2018 17:57 GMT)

Support

 

 

GBPJPY: PREPARING FOR ANOTHER LEG UP – 1HR CHART (WED 19 SEPT 2018 17:47 GMT)

Support

 

GBPUSD: LOCKED IN 1.3131 – 1.3171 RANGE – 1HR CHART (WED 19 SEPT 2018 17:13 GMT)

Support

 

USDJPY: TESTING SUPPORT BEFORE ANOTHER LEG UP – 1HR CHART (WED 19 SEPT 2018 17:13 GMT)

Support

 

GBPUSD: REJECTION AT THE RESISTANCE – 1HR CHART (WED 19 SEPT 2018 01:35 GMT)

Support

 

EURUSD: FIRST SUPPORT IS BROKEN – 1HR CHART (FRI 14 SEPT 2018 16:11 GMT)

Support

 

EURUSD: REJECTION AT THE FIRST RESISTANCE  – 1HR CHART (FRI 14 SEPT 2018 09:32 GMT)

Support

 

GBPJPY: CONSOLIDATING – 4HR CHART (FRI 14 SEPT 2018 09:11 GMT)

Support

 

GBPCAD: APPROACHING NEXT RESISTANCE – 1HR CHART (FRI 14 SEPT 2018 08:45 GMT)

Support

 

EURUSD: TESTING RESISTANCE CLUSTER – 1HR CHART (FRI 14 SEPT 2018 08:10 GMT)

Support

 

EURCHF: CONSOLIDATING – 1HR CHART (FRI 14 SEPT 2018 07:25 GMT)

Support

 

AUDUSD: CHALLENGING THE NEAREST RESISTANCE – 1HR CHART (THUR 13 SEPT 2018 22:40 GMT)

Support

 

USDCAD: DRIFTING ABOVE THE NEAREST SUPPORT – 1HR CHART (THUR 13 SEPT 2018 22:26 GMT)

Support

 

EURUSD: CLUSTER OF RESISTANCES ABOVE – 1HR CHART (THUR 13 SEPT 2018 22:16 GMT)

Support

 

EURGBP 1HR CHART (THUR 13 SEPT 2018 13:00 GMT)

Support

 

 

To draw the support or resistance lines, you need to connect two or more contact points where price is rejected. The more the points of price contact to a level, the more the significance of that support or resistance level.

Support

 

Support is a floor, while resistance is the ceiling. Let’s imagine a boy in a room throws a football to the ground with a great force.

 

Support

In the diagram above, point A is the support while point C is the resistance.

Let’s imagine a man, bigger than the boy, throws another ball with a powerful force across a hall,

Support

In the diagram above, points A, C, E, and F are the supports while point B and D are the resistance to the ball. When price moves and leaves a V shape behind, a support is formed, while when price moves and leaves an inverted V shape behind, a resistance is formed.

 

New Levels of Support And Resistance

When price break past a support level, that level becomes a new resistance, while when price breaks past a resistance level, the level becomes a new support level.

Technically, when price breaks out of a support level, it is advisable to wait for the price to test the level as resistance before it continues the downward movement. On the contrary, when price breaks a resistance level, it is advisable to wait for the price to test the level as support before it continues the upward movement.

However, there are instances where price hovers around the support or resistance level.

Identifying Strong Levels Of Support And Resistance

The level of support or resistance can be categorized as a strong support or resistance if price touches and bounce off that level in multiple times. At strong support or resistance levels, the area is well defended by bulls or bears and price most of the time do reverse from that area.

Weekly and Monthly charts are good time frames for the identification of strong support or resistance levels. Higher time frames offer a good view of the most relevant support or resistance levels for longer trades. Lower time frames show intermediate support or resistance levels for short-term trades.

Support

Support And Resistance In Ranging Market

Support and resistance levels are easily identified in range bound markets as price bounces off the floor and ceiling in a straight line manner. Upper and lower boundaries are easily identified in this type of market. Buy signals are valid at the support boundaries while sell signals are valid at the resistance boundaries.

Support

Support And Resistance In Trending Market

In a trending market, price moves in a staircase pattern. Higher highs or swing highs form the resistance level while higher lows or swing lows form the support in a bullish trend. On the other hand, lower lows or swing lows form the support level while lower highs or swing highs form the resistance in a bearish trend.

Descending and ascending trend lines are also used by traders to identify support and resistance levels.

Illustration: Let’s imagine a scenario, where a boy tries to throw a football from a tall story building to a man on the street at a bus terminal by the seaside as shown in the image below. The boy misses the target but the ball bounced on the bus below, hitting the ceiling of the terminal roof and dropping on the floor before bouncing away into the sea.

Support

In the diagram above, points A and C are the supports while point B is the resistance to the ball.

Support

Support

Support

Support

Placing A Trade At The Support Or Resistance Level

Basically, a trader may place buy trades at the support line while sell trades are mostly placed at the resistance levels. However, certain price action formation is expected for confirmation before placing trades at the support or resistance level. Formation of pin bars, bullish or bearish engulfing bars, and other price action formation are critical for confirmation before placing trades at the support or resistance level.

Support and resistance lines can be used to spot price breakouts and price reversals. The lines can also be used as a trade target (take-profit) point.

Support

 

How to trade the Support (Demand) and Resistance (Supply) Strategy

-Buy at the support (demand) area (placing 15 to 20 pips stop-loss below the area) – using 1-hour time frame or higher time frames.

-Sell at the Resistance (Supply) area (placing 15 to 20 pips stop-loss above the area) – using 1-hour time frame or higher time frames.

-When in a profit of above 10  to 15 pips, activate trailing stop or move stop-loss to entry price area

-At the Resistance level, sell when the price is unable to close above resistance. Also, buy when the price is able to break and close above the resistance level.

-At the Support level, buy if the price is unable to close below support. Also, sell when the price is able to break and close below the support level.

 

Caution: Forex trading is risky. It is advisable that you acquire enough experience before you start to trade with real money. Do not invest in money that you cannot afford to lose (it is important that you study leverage, lot size, and money management in Forex trading very well before you execute your trade decision).

To trade in the Forex Market you must first sign up with a Forex Broker. There are lots of Forex Brokers out there that offer good service to their clients. Services include tight spread, partnership amongst others. My preferred brokers are 1. Alpari (https://alpari.com/en/?partner_id=1244646) and 2. FXTM (http://forextime.com/?partner_id=4806145). You may sign up through any of the partner links above. You may also send me a mail in case you need me to guide you on how to sign up and start trading (beanfxtrader@gmail.com).

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