Introduction to Strategy and Style
?Support and Resistance
? How to trade the BOUNCE or the BREAK
Understanding the use of trading tools (Indicators)
- Moving Average
Ii. Exponential moving average
When the price moves up and then pulls back, the highest point reached before it pulls back is now resistance.
As the price continues up again, the lowest point reached before it climbs back up is now support.
Support and Resistance are Zones
One thing to remember is that support and resistance levels are usually not exact numbers.
To help you filter out these false breakouts, you should think of support and resistance more as “zones” rather than concrete numbers.
One way to help you find these zones is to plot support and resistance on a line chart rather than a candlestick charts
You buy when the price is at the support level
Another thing to remember is that when price passes through a resistance level, that resistance could potentially become support.
The same could also happen with a support level. If a support level is broken, it could potentially become a resistance level
How to Trade Support and Resistance
Trading support and resistance levels can be divided into two methods
We have two types of supports and Resistances
?Minor Support and Major support
?Minor resistance and Major resistance
Minor support or resistance is a level that is considered very weak (These are characterized usually by less than 2 points before being broken). Major support or resistance is a price level that is considered to be very strong (These are characterized by at least 3 points “bouncing” off these levels).