What is Support and Resistance? Your Key to Forex Trading Success
What is Support and Resistance? Your Key to Forex Trading Success
Support and resistance are critical areas in Forex trading where buyers and sellers clash, driving price reactions that can lead to profitable trades. After seven years of trading and millions in profits, I’ve used Price Action Trading at these areas to generate $1,000–$1,500 weekly in the $6.3 trillion Forex market. In this guide, I’ll explain support and resistance, why they’re essential, and share a real trade example to show how they work.
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1. What Are Support and Resistance?
Support and resistance are areas of interest where price reacts due to buyer or seller activity, acting as floors (support) or ceilings (resistance) for price movement.
Key Definitions:
Support: A level where price declines, buyers step in, and price bounces upward (e.g., buyers “support” price).
Resistance: A level where price rises, sellers intervene, and price falls downward (e.g., sellers “resist” upward movement).
Area of Interest: Support (for buys) or resistance (for sells) where price reacts impulsively, offering high-probability trade setups.
I lost thousands ignoring support and resistance. Trading these areas transformed my results.
2. Why Are Support and Resistance Important?
Support and resistance are foundational because they identify zones where price reacts predictably, enabling fast, obstacle-free moves to your take-profit.
Benefits of Trading Support and Resistance:
Impulsive Moves: Price at support (buyers) or resistance (sellers) moves quickly to your target without stalling, unlike mid-range trades.
High-Probability Setups: These areas concentrate buyer/seller activity, increasing the likelihood of a reaction in your favor.
Clear Trade Direction: Buy at support, sell at resistance, aligning with market dynamics for better win rates.
Trading without support and resistance was like driving blind. These zones gave me clarity and profits.
3. How to Identify Support and Resistance
Use TradingView to mark support and resistance as areas of interest (3+ rejections) on daily/4-hour charts, confirming entries on lower timeframes with Price Action.
Steps to Identify Zones:
Find Areas of Interest (5 Minutes): On daily/4-hour charts, mark levels with 3+ price rejections (sharp reversals or “elbows”). Support is where price bounces up, resistance where it falls.
Confirm Trend (3 Minutes): Use top-down analysis to ensure the trend aligns (e.g., bullish for support buys, bearish for resistance sells).
Plan Entries (2 Minutes): On 1-hour/30-minute charts, look for confluences (e.g., bullish engulfing at support) to enter trades.
Mastering these zones took months but now delivers consistent wins like $85,000 in a day.
4. Trading Support and Resistance Correctly
Trade support and resistance as intended—buy at support, sell at resistance—using Price Action, high-volume sessions, and a disciplined plan to avoid common mistakes.
Trading Tips:
Use Zones Correctly: Buy at support (like jumping from a pool floor), sell at resistance (like hitting a ceiling), avoiding reverse trades (e.g., selling at support).
Confirm with Price Action: Enter at support with bullish engulfing candles or at resistance with bearish engulfing, ensuring 3+ rejections.
Trade London/New York Sessions: High volume (3:00 AM–12:00 PM EST) ensures strong reactions and low spreads.
Risk 2%: Use BabyPips’ Position Size Calculator to risk 2% per trade (e.g., $100 on $5,000) for controlled losses.
Manage Psychology: Stay patient, waiting for price to hit support/resistance, avoiding FOMO-driven premature entries.
Common Mistake to Avoid:
Mixing Roles: Don’t sell at support (like diving into a shallow pool) or buy at resistance (like jumping into a roof)—it leads to losses.
Trading support and resistance correctly boosted my win rate and profitability.
5. Real Trade Example: EUR/USD Support Trade
Here’s a Price Action trade I took on EUR/USD at a support level, following my day trading plan, generating $336 in 7 minutes during the London session:
Trade: Buy EUR/USD on a 1-hour timeframe at the London session open (3:00 AM EST).
Setup: Daily chart showed a bullish trend (higher highs/lows, HH/HL) via top-down analysis. 4-hour chart confirmed bullish structure (HH/HL). A daily support level (3+ rejections, marked by sharp elbows) aligned with a 1-hour bullish engulfing candlestick, signaling a high-probability buy.
Execution Plan: Risked 2% ($100 on $5,000 account) using BabyPips’ calculator (0.53 lots, 15-pip stop-loss). Traded at 3:00 AM EST (London open) for high volume. Used TradingView’s long position tool for a 15-pip stop-loss (5 pips below support), 30-pip take-profit (next resistance), 1:2 ratio. Journaled on MyFXBook to track performance.
Execution: On MetaTrader 5, selected “Instant Execution,” entered 0.53 lots, set stop-loss 15 pips below support, and take-profit at next resistance. Spread was 3 pips.
Psychology: Waited patiently for price to hit support, avoiding FOMO-driven early buys, trusting the bullish engulfing confirmation.
Result: Profited $336 as price impulsively bounced from support, closed manually to demonstrate, shared live with my community. MyFXBook logged a 1:2 risk-to-reward and London session success. No slippage occurred.
Profit Screenshots: My students see results like $1,000, $2,000, even $10,000 weekly trading support and resistance. Join my course to access these setups!
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Final Thoughts
Support and resistance are your foundation for high-probability Forex trades, driving $1,000–$1,500 weekly by leveraging buyer/seller reactions. Follow these principles to succeed:
Identify Zones: Mark support (buy) and resistance (sell) with 3+ rejections on daily/4-hour charts.
Trade Correctly: Buy at support, sell at resistance, avoiding reverse trades (e.g., selling at support).
Use Price Action: Confirm entries with bullish/bearish engulfing candles at areas of interest.
Trade London/New York: High-volume sessions (3:00 AM–12:00 PM EST) ensure strong reactions.
Stay Patient: Wait for price to hit support/resistance, avoiding premature FOMO-driven trades.
Ready to trade like a pro? Join my 5-Day Trading Mini-Course to learn my support and resistance strategy and trade with a community generating massive profits weekly.
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