How To Draw Perfect Support And Resistance In The Forex Market
by FinanceAttitude Team
Trading the financial instrument can be extremely difficult if you are relatively new in this industry. Most of the professional trader who has to trade the forex market for a long period of time have undergone extensive learning procedure. If you truly want to become a professional forex trader then you need to know what is support and resistance in the market. If you don’t know what is support and resistance level then you will not be able to make money by trading the forex market. In this article, we will tell you how to draw the perfect support and resistance level in the market.
Support and resistance level: A support is a critical place in the forex market which gives the market fresh buying pressure. The market always bounces up and starts its bullish rally after hitting a critical support level. On the contrary, a resistance is such a level which restricts the bullish move of the pair. When the price hits a critical resistance zone in the market the price falls dramatically.
So how do we draw the support and resistance level in the market? The answer is pretty simple. You will be using the horizontal line and the key highs and lows in the market for drawing the support and resistance level in the market.
Let’s see how the professional traders draw the support and resistance level in the market.
In the attached figure, you can clearly see how the professional traders have drawn the support and resistance level in the market. Always remember that you need at least two connecting points in order to draw the support or resistance lines in the market. And never join the connecting point by force since it will give you faulty support and resistance level in the market. Most of the professional traders use the higher time frame to draw the important support and resistance level in the market since higher time frame gives the best trading spot to the traders.
Trading the support and resistance level
Professional traders execute their buy orders in the market at the key support level and go for short entry when the market hits a resistance level. But trading the support and resistance level simultaneously is not a good practice. As a professional trader, you must identify the prevailing trend in the market to determine which level you are going to trade. For instance, if the prevailing trend is bullish then you will trade the support level only since it will reduce your risk to a great extent. Always remember to use proper risk management factors before you execute any orders in the market. If you don’t follow proper risk management factors then you will eventually lose in the market. In the eyes of expert traders, perfect risk management factors are the key ingredient to succeeding in this industry.
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