How to Identify Support and Resistance for Profitable Forex Trading
Master Support and Resistance for Profitable Forex Trading
Support and resistance are the cornerstones of Forex trading, acting like a table that price uses to bounce up or push down. After seven years of trading and millions in profits, I’ve learned that trading at these levels with Price Action Trading is the key to generating $1,000–$1,500 weekly in the $6.3 trillion Forex market. In this guide, I’ll explain support and resistance, how to identify areas of interest, and how to trade them profitably, plus a real trade example to show it in action.
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1. What Are Support and Resistance?
Support and resistance are price levels where the market tends to reverse, acting as a platform for price to bounce (support) or reject (resistance).
Key Characteristics:
Support: A level where price rejects upward, like a table you push off to stand up. It’s where buyers step in, driving price higher.
Resistance: A level where price rejects downward, like pulling yourself down using the table’s underside. It’s where sellers dominate, pushing price lower.
Duality: Support can become resistance, and vice versa, depending on price movement (e.g., a broken support becomes resistance).
Think of support as the floor and resistance as the ceiling—price needs these levels to move, just as you need a table to push or pull.
2. How to Identify Support and Resistance
Support and resistance levels are zones where price has reversed multiple times, visible on charts as areas of rejection.
Identification Steps:
Support Levels: On TradingView, mark zones where price has bounced upward multiple times (e.g., 3+ rejections). These are areas where buying pressure is strong.
Resistance Levels: Mark zones where price has rejected downward multiple times (3+ rejections). These indicate strong selling pressure.
Not Perfect: Levels aren’t exact due to candlestick wicks, but zones with multiple touches are reliable.
I ignored support/resistance early on, entering trades randomly and losing. Marking these levels transformed my trading.
3. Areas of Interest: The Key to Trading
Areas of interest, also known as supply/demand zones, are support or resistance levels with 3+ rejections, making them high-probability trade entry points.
How to Spot Areas of Interest:
Minimum 3 Rejections: A valid area of interest requires at least three market structure rejections (e.g., candlestick reversals at the same level). More rejections increase reliability.
Buy at Support: Enter buys at support areas with 3+ upward rejections, confirmed by bullish candlestick patterns (e.g., bullish engulfing).
Sell at Resistance: Enter sells at resistance areas with 3+ downward rejections, confirmed by bearish patterns.
Trading at areas of interest with strong rejections delivered wins like $110,000 in a single day.
4. Trading Support and Resistance with Price Action
Use Price Action Trading to enter trades at support/resistance levels, aligning with market structure and trading during high-volume sessions.
Trading Tips:
Confirm with Market Structure: Ensure the trend supports your trade (e.g., buy in a bullish market with higher highs/lows, sell in a bearish market with lower lows/highs).
Use Candlestick Patterns: Look for patterns like bearish engulfing at resistance or bullish engulfing at support to confirm entries.
Set Stop-Loss/Take-Profit: Place stop-losses 5–10 pips beyond the level (e.g., above resistance for sells) and take-profits at the next structure point for a 1:2 risk-reward ratio.
Trade London/New York Sessions: High volume (3:00 AM–12:00 PM EST) ensures low spreads and momentum.
Manage Psychology: Avoid FOMO by waiting for confirmed setups at areas of interest, trusting the trend.
Random entries without support/resistance cost me thousands. Trading these levels with discipline changed everything.
5. Real Trade Example: EUR/GBP Resistance Trade
Here’s a Price Action trade I took at a resistance level during the London session, generating $336 in 7 minutes:
Trade: Sell EUR/GBP on a 2-hour timeframe at the London session open (3:00 AM EST).
Setup: Daily chart confirmed a bearish trend (lower lows/highs) via top-down analysis. A resistance level (area of interest) with 3+ rejections formed, marked as a lower high (LH). A bearish engulfing candlestick confirmed the sell signal on the 2-hour chart.
Entry: Used TradingView’s short position tool on a $5,000 demo account (1:50 leverage). Risked 2% ($100) with a 15-pip stop-loss (5 pips above resistance/LH) via MyFXBook’s position size calculator (0.53 lots). Take-profit set at the next support (30 pips) for a 1:2 risk-reward. Spread was 3 pips due to high-volume session.
Psychology: Stayed disciplined, trading at a confirmed resistance with no FOMO, trusting the bearish trend.
Result: Profited $336 on MetaTrader 4, closed manually to demonstrate, shared live with my community. No slippage occurred.
Profit Screenshots: My students see results like $1,000, $2,000, even $10,000 weekly with support/resistance trading. Join my course to access these setups!
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Final Thoughts
Support and resistance are your foundation for profitable Forex trading, acting as platforms for price to bounce or reject, generating $1,000–$1,500 weekly. Follow these principles to succeed:
Identify Levels: Mark support (upward rejections) and resistance (downward rejections) with 3+ touches on TradingView.
Trade Areas of Interest: Focus on zones with 3+ market structure rejections for high-probability entries.
Use Price Action: Confirm entries with candlestick patterns, aligning with the trend (bullish or bearish).
Trade London/New York: High volume ensures low spreads and momentum.
Stay Disciplined: Maintain a 1:2 risk-reward ratio and 1–2% risk per trade, avoiding FOMO.
Ready to trade like a pro? Join my 5-Day Trading Mini-Course to learn my support/resistance-based Price Action strategy and trade with a community generating massive profits weekly.
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