Support and Resistance Areas
One of the most common and most annoying mistakes new traders make is completely ignoring Support and Resistance areas. There is so little focus on the importance of Support and Resistance areas on Forex sites and books. Most people would rather focus on lazy Support and Resistance. These are lines that are calculated using formulas such as Pivot Points or Fibonacci. While lazy Support and Resistance areas do have some use, placing your own Support and Resistance areas is a far better and more accurate option.
Before we launch into this lesson, you should memorise the following terms.
Support always equals a buying area. The words Buyers, Bulls, and Support are interchangeable and I will be using them a lot. Conversely Resistance is always a selling area and the terms Sellers, Bears, and Resistance are interchangeable.
So what exactly is Support and Resistance?
If an area of Support is crossed by price it becomes an area of Resistance. If an area of Resistance is crossed it becomes an area of Support.
Placing Support and Resistance
There are two types of Support and Resistance areas that I place. The first type is simple Support and Resistance lines and the second type is Support and Resistance zones. When price bounces from Support and Resistance it usually does not bounce from the same exact point so for this reason I mostly place Support and Resistance zones. Support and Resistance zones mark out general areas of roughly 10-30 pips in which the price bounces. Support and Resistance lines are used on the rare occasion that price bounces from the same exact point, several times.
When trading Support and Resistance zones and lines I do not differentiate between the two. They are used in the exact same way.
My Support and Resistance
I know that Support and Resistance areas can seem somewhat intimidating. As long as you keep practising you will find that placing Support and Resistance is dead easy.
If you’re having trouble placing your Support and Resistance areas refer to the Forex blog. I usually post my current Support and Resistance areas on my blog with my analysis.
I recommend that you place Support and Resistance areas yourself first and then check them against mine. You need to practice placing them if you are ever to understand their importance.
