in forex trading are very important support / resistance levels.They should pay attention to whether, on which strategy you trade, whether it is Price Action, or any other trading system.Levels will help improve your trading repeatedly.In this lesson we will talk about what support / resistance levels, how to build them, at what levels should pay attention and, most importantly, how do we apply them in his own trade on the Forex market.
level - this place is a break of the trend or "protorgovki".It happens kind of struggle between buyers and sellers, the outcome of which depends on - whether to continue the movement of the price of the original, or turn around and go the other way.Support / resistance levels called any previous peak or trough.Let's look at this clearly on a theoretical price chart.
imagine that we now have a chart with a rising trend.
Let's note the levels given in the chart.
I selected their red lines:
Just at the end of our schedule, you may notice tha
It can be considered for the level, so let's just note its red line:
Thus, we have found on the chart all the levels.
Immediately want to say that the level - it is not a straight line, which is the same point to point with a certain price on the chart, and the band, which includes some space around it:
On this graph you just might see,that some of the local maxima and minima lie on one line.But at the same time there is the one that lies just below the other.That's okay, because he's also in our area marked level.
So level - is the point of a possible reversal of the price or, in other words, an increase in the activity of traders.You probably have a question: "Why is this place so attractive to traders' similar market reaction causes the accumulation of limit orders of buyers and sellers.Why do they expose their limit orders?The answer is very simple.All because they were obvious where to place a stop-loss.This is a feature of human perception, because the market here is not only the robots, but people.
And in addition, I note that the robots are programmed people, who are aware that people trade market.They understand that instead of stopping in an unknown space, where it is not clear how to set stop-loss, the human brain will look for something for which you can cling to.His is to enter the market at such fractures.
level - a cluster of limit orders sellers or buyers.Since at levels observed high activity of traders, the levels are a possible destination for a reversal in price or an increase in its activity.
How to find and build their levels on the chart?
Before you start celebrating the levels on the chart, in the first place, we must pay attention to the extremes, that is, the extreme points: the highs and lows of schedule.
Typically, levels are usually marked on the chart with a red line, which is in the toolbar MetaTrader 4:
Spending levels are extreme points of candles, while trying to guide them through the zone of maximum density barov.Chto does this mean?For example, the chart we present the extremum point.
It stands out with its tail:
It would seem necessary to build on the level of its tail, but if you look closely at the chart, we can see that the price struggled several times against the obstacles that did not allow her to go upstairs.It is for this reason that we need to shift the level just below the tail:
On the one hand, it is closest to the highest point, but at the same time passing through the area with the highest density svechey.Eto gives a more optimal picture.
And I again remind you that the level - is not a line, and area.We look at the line, but remember that in fact it may have something like this in the graph area of influence:
I note that the price is not required to reach the point in our line item.It can turn around and go in the opposite direction, before reaching the level we have built.Therefore, it is itself a kind of zone and work within it.
How to find if you are new levels?
beginners can be difficult to see the peaks and valleys in the chart.This is because they lack experience.In this case, you can help to switch graphics in linear mode.
At first, it will be better to use it.
In the future you will be able to do it on a regular schedule with candles or bars.I must say that it is important to learn how to work a regular schedule, because it shows the extreme price point, tails and shadow candle and built levels without them would be, to say the least, inaccurate.
As for the construction of training levels you can come in handy indicator ZigZag:
It will help you celebrate the levels on the chart:
But I recommend you do not use indicators, but to find the levels manually.
How to choose a meaningful level?
Once marked on the chart all the peaks and troughs, it may seem that the levels on the chart too.
And if you rewind the chart back and mark all the levels there, in the end you get a graph izrisoval horizontal lines.And nothing but the levels are not left on it.How to be and what to do about it?To begin, you must understand that not all levels deserve your attention.First of all, do not look away.Wind off schedule for a few years ago required.
You should understand that traders are looking at the current screen.Simply put, you need to look at what gets into the monitor, which is nearly 200 candles.Therefore, the distance that we need to look for when finding the levels on the chart - it's about 200 points, or one screen.If close to the limits of the screen was a strong minimum or maximum, then it should be taken into account in setting the levels.
For example, it is worth noting the extreme value Frank:
Since such extremes strongly highlighted in the chart, traders will remember them for a long time, and therefore they should not be forgotten.
Try celebrate clear the levels, which are visible to the naked eye.They drew attention to the largest number of traders.If you go into the technical details of a little deeper, we first note the extremes, they are the most important in the spread price.Next, we note the levels formed long tails - is not nothing but a collection of stop-loss.Price produced a movement, enriching market makers.Traders and these levels are stored in the future use in the trade.
In addition, it is necessary to mark the levels of which happened movement impulse breaks the local minima and maxima.And, of course, we mark the levels where there was a strong long protorgovka when the price is not allowed to go up or down.
Now that I've given you the information that you should pay your attention on what levels, let's edit them in our example.
So look our schedule with marked on it earlier levels:
begin editing from the bottom, from left to right.The lowest level was extreme.After it happened price movement, which struck the local maxima, that is, gave us a new point high.
Hence we conclude that this level we leave.
next level gave us information about the same as the previous one, but there was protorgovka.Price is not allowed to go below a long time.On it there is a certain strength.From him buy some large positions.
Therefore, we also his reserve:
On it goes consolidation and price below a certain level to go do not give.
next level, we noted, based on the long tail of the candles.But a good downward movement is not given, so this level we remove:
There was no movement that would give us a new local minima.If from this pin bar price would go down, then the level would have a place to be.But as there was no movement, and therefore did not result.
next level you need to gently put, that he passed through the local minimum and thus seized the candle behind.This level has given us a new point of high, so we leave it.
Then we held level as the price three times it touched and subsequently given a new high:
This means that we leave it.
it may seem that it takes into account the price for the next level.But the new local minimums and maximums on the previous was not, so we remove it:
Its very easy to spot on the chart.It stands out, and hence the level drawn through it, we'll leave.It will attract traders and perhaps bring us benefit.The last level is at the top.At the moment he held on extremes.Therefore, it remains in the graph.That's the way we edited our schedule and cleared it from unnecessary levels.
In this article, we'll look at support and resistance levels.I usually call them simply levels.But if to distinguish between these concepts, it turns out that the levels of support - a level that interfere with the price lower than leave.A resistance levels - a level at the top, which prevent the price to rise above.
Our last level will be conducted by a certain time is the resistance for the price.He will resist its further movement upwards.
Changing roles support and resistance
And as you might have guessed, the support may be resistance after breaking through the level-down has been carried out.
For example, here is the level of support for a long time was.After his trial, he briefly became resistance:
When the price breaks it up, he again became a support level.Remember, if the price is above the level that is supported, and if on the contrary, it is the resistance.Changing levels of roles on the graph - a normal phenomenon.
How to understand that the level was breached?
Sometimes, on a chart going zigzag movement of the price.Because this can be confusing, which relates to what level.Price goes zigzag and hit it back and forth.
Therefore, there is a very simple criterion levels.To understand that level is broken, it is necessary to look at the two candles on the closing price level.If the level was breached for the first time, and then it was re-penetration, this means that the level is breached.There is nothing complicated, important to follow closely the schedule.
How to use levels in Forex trading?
For a start it is worth remembering that the levels - is the fulcrum.If you are somewhere there was a buy signal, and you see that the price is at a level that means that the signal has a fulcrum.It can be taken with greater certainty.
For example, we here at this point in the middle of the graph there was a buy signal:
He had no point of support, so it is less significant than the next signal on the level of support in the blue box.
In addition, the levels used to determine the stop-loss and take-profit purposes.As for goals, I think you will all is clear.The aim appears next level.
Stop-loss orders are placed just below, if he has acted as a support.Imagine that we have entered the market somewhere in the area marked by a blue rectangle:
Stop loss we would have put a little below, giving a certain freedom to price:
It's all determined by eye.To do this, there are no clear criteria.
What timeframes build support / resistance levels?
on different timeframes levels have different meanings.
level of support and resistance on the daily chart is much more important than time.So if you trade intraday, I advise you to determine the levels on the daily charts or H4.And you can trade on the time frame in which you are accustomed.
Try not to invent extra levels only in order to justify their entry into the market.If the levels are close to each other, then we focus on the next.We Remember, they are processed from right to left.Also, do not forget that the rebound from the level is more probable than its breakdown.
If you trade levels, and not just use them as reference points for the stop-loss and purposes, you can use: a breakdown, and hang a false breakdown level.But of this we have a separate video tutorials.
levels of trade are guaranteed useful when working with any strategy.Therefore, before entering into the market, do not be lazy to note them on the chart.They will show you where to enter the market, and will help you put a stop loss.
Subject Price Action Offline