Support and Resistance Levels in Forex Trading

support and resistance

The peak points of Forex are the ‘Bounce’ and ‘Break’. If you can handle the trade efficiently at these points then the heaps of profit are waiting for you in the critical game of Forex.

Bounce:

If you want to efficiently deal with bounce then you need to have some confirmation that the resistance or support point will manage to hold. So let the value of the currency bounce first and then enter into trade.

A Common Mistake:

New traders that try their luck in Forex tend to make a common mistake. Obviously such a mistake leads them to incur losses. They set their orders exact on the crucial points of Support and Resistance points. Then they patiently wait for the execution of the trade. Sometimes this trick works but mostly this technique of trade result in loss.

Break:

Well you cannot always enjoy Bounce, in Forex you need to be prepared for break as well. The Break is inevitable in Forex. If you want to become an ace in Forex, you need to learn to deal with Break efficiently. Basically there are two main ways of dealing with break.

The Conservative Way:

The conservative way of dealing with the break is to patiently trade. Do not be rash and do not act immediately after break. Be patient and let the price do the ‘pullback’ towards the broken Support or Resistance point and trade after the Bounce.

Aggressive way:

As the name suggests, it means to trade immediately as the value just crosses through the support or resistance point.

However in some situation, value of the currency plays with you by moving in just a single direction. In such a situation, you just need to utilize the stop loss order to cope with the situation and incur minimal loss. Thus every dilemma has a solution, you just need to look for it.

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