Support and Resistance Lines Support and Resistance Lines can be both horizontal and sloping.
Resistance Lines are drawn through previous pivot highs.Resistance acts like a ceiling.Depending on it;s strength, a resistance line can pause an up trend and when cery strong can reverse an up trend.It's strength is determined by the length of time it serves as resistance and the number of times it has been touched by price.The longer the period of time, the greater the strength of the line.Some traders will sell at resistance line.
Support Lines act like a floor and price areas where a currency pair finds it difficult to penetrate below the Support Line.Support lines are drawn through a previous se of lows and can either pause a downtrend or reverse it depending on the strength of the Support Line. Some trader buy at Support Line. All traders see the same thing.
Do not BUY close to RESISTANCE LINES Do not SELL Close to Support LINES
as there is a good change there will be a reversal
Trendlines
It is impotant for traders to know which way the market is going, i.e is it trending up or down or even going sideway. Money can be made in all these condition, but it is important that traders "Trade with the Trend"
A trendline is a straightline that connect key prices areas in a move, an up trendline connects successive Higher Lows or Higher Highs and a down trendline connects successive Lower Highs or Lower Lows.Trendlines connecting successive Lower Highs is also known as a resistance line while a trendline connecting successive higher Lows is also known as a support line.
Trendlines can be defined as border lines for making buy or sell decisions.
A Trendline of about 45 degrees is considered the most reliable, and if steeper than that market typically cannot sustain that kind of momentum for long. Watch to see if the market bounces off a trendline or slices through. Watch for restest of trendline after the price has sliced through.You will often find good buying or selling points at the 3rd touch of a trendline.
Resistance Lines are drawn through previous pivot highs.Resistance acts like a ceiling.Depending on it;s strength, a resistance line can pause an up trend and when cery strong can reverse an up trend.It's strength is determined by the length of time it serves as resistance and the number of times it has been touched by price.The longer the period of time, the greater the strength of the line.Some traders will sell at resistance line.
Support Lines act like a floor and price areas where a currency pair finds it difficult to penetrate below the Support Line.Support lines are drawn through a previous se of lows and can either pause a downtrend or reverse it depending on the strength of the Support Line. Some trader buy at Support Line. All traders see the same thing.
Do not BUY close to RESISTANCE LINES Do not SELL Close to Support LINES
as there is a good change there will be a reversal
- Trendlines are one of the most useful tools in trading. When you trade off trendlines you are trading off pure price action.
- Trendlines are utilized to determine trend, momentum, support and resistance and reversals.
- The steeper the slope the greater the momentum.
- Trendlines are support and resistance.
Trendlines
It is impotant for traders to know which way the market is going, i.e is it trending up or down or even going sideway. Money can be made in all these condition, but it is important that traders "Trade with the Trend"
A trendline is a straightline that connect key prices areas in a move, an up trendline connects successive Higher Lows or Higher Highs and a down trendline connects successive Lower Highs or Lower Lows.Trendlines connecting successive Lower Highs is also known as a resistance line while a trendline connecting successive higher Lows is also known as a support line.
Trendlines can be defined as border lines for making buy or sell decisions.
A Trendline of about 45 degrees is considered the most reliable, and if steeper than that market typically cannot sustain that kind of momentum for long. Watch to see if the market bounces off a trendline or slices through. Watch for restest of trendline after the price has sliced through.You will often find good buying or selling points at the 3rd touch of a trendline.
Another nice review is here FFactory
Update:Some good article I found on jacko of forex factory thread.
Trading these lines can be very profitable, and you can do away with indicators if you follow a few simple rules...
1. The steeper the line the shorter it lasts, keep your stops tight if it moves away quickly. Keep your stops just above (resistance) or below (support) the line.
2. The price will always move back towards the support or resistance to test it, if there’s been a sizable move, wait for the consolidation to bring it back to the line, then trade.
2. You need at least three touches (or points in a line) to confirm that it is a support or resistance level. Two is not enough. If the price action moves away fast from the line connected by these points it’s probably the dying gasp, but don’t trade until you hit that line again.
3. A good way to choose an entry is to look for an established line and follow it up with sell orders a few pips below (support) or buy orders above the line (resistance) in the opposite direction.
4. If a “trend” is older and you're not sure if it's going to break or not, wait till you're on the line and then straddle it, that way you can get into an older move. I wouldn’t recommend this though; rather wait for a change in direction. Once you’re into the rhythm you’ll almost always have an open position.
5. If you’re not sure phase in your trades, add to your position every ten or twenty pips.
6. Breaks off support and resistance are generally confirmed by big bars or a big bar, so if you see one on a line you know the “trend” has probably changed.
7. Price does not like support or resistance levels. It mostly tests them and then moves away quickly. You’ll rarely find much price action in the vicinity of the line. If price is hanging around a support or resistance level, it’s likely to break in the opposite direction.
8. If the market is moving up you only trade the support line, if down you only trade the resistance line...
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