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Thread: The Importance of Support and Resistance

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    Default The Importance of Support and Resistance

    In the amazing world of forex trading, the forecasting of the future trends and price variations of the currencies are extremely important. Two of the important financial indicators used in the forex trading market are support and resistance levels. Fellows let us discuss this.

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    Support and resistance is the one of the most popular and widely used methods of technical analysis in Forex. It’s simple, easy to understand and doesn’t even require any additional analytical tools except the bare chart of the currency pair. Support and resistance levels form when the price action creates the distinct peaks and plateaus on the chart. Support level acts as a barrier for the rate that falls, while the resistance is the level that prevents rate from growing farther. Buying when the resistance is broken and selling when the support level is broken is an easy Forex technique that made thousands of traders rich.

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    I always use a breakout strategy of support - resistance in H1 time frame, support and resistance for me is like a wall that if penetrated will cause the trend continues. Maybe I think too simple, but it really works on me.

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    As a forex trader you should learn to respect support level and also resistant level, if you do this making loses in trades will be real. This is my little candid advise.

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    Quote Originally Posted by samurai3x View Post
    I always use a breakout strategy of support - resistance in H1 time frame, support and resistance for me is like a wall that if penetrated will cause the trend continues. Maybe I think too simple, but it really works on me.
    Samurai3x, you are right support and resistance are very important levels and any trader who respects it will not go wrong. You may look at your trading strategy as simple but most profitable trading strategy is always simple. I will encourage you continue with it if it is profitable for you.

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    The more times that a price bounces off support and falls back from resistance, the stronger these support and resistance levels become. It creates a self-fulfilling prophecy. The more often it happens, the more likely it is to happen again. The more those historical patterns repeat themselves, the more traders "know," and the more confident they become in forecasting the future behavior of the price. Sometimes price become so entrenched in this trading range, that the price eventually has a hard time breaking through the levels to either the up or downside.

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    what tool are you using to get support/resistance level on mt4 ? I myself stick with murray math lines. I find that it depicts all the levels on different time frames quite well. Was wondering if there are some other awesome tools

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    I use pivot point and is also good.A pivot point analysis is often used in conjunction with calculating support and resistance levels, similar to a trend line analysis. In a pivot point analysis, the first support and resistance levels are calculated by using the width of the trading range between the pivot point and either the high or low prices of the previous day. The second support and resistance levels are calculated using the full width between the high and low prices of the previous day. Since your murray maths lines is good for you I will encourage you to continue with it.

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