Now that you know the basics, it’s time to use these basic but very useful technical tools in your trading.
Because we want to make it easy for you to understand everything, we’ve broken down the trend line and the support and resistance levels into two simple ideas: bounce break.
Note that trend lines and trend channels are also a form of support and resistance. In this article, if we say the support and resistance of the trend line also includes.
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Jump or bounce
As the name implies, one of the trading methods on support and resistance is when the price reacts and jumps immediately after hitting the levels.
Many forex traders make the mistake of placing their orders directly on the support and resistance levels and waiting for their trades to be completed.
Of course, this may work in some cases, but in such a trading method it is assumed that the level of support or resistance will be maintained without the price yet reaching it.
You may be thinking, ‘Why not put an entry order on the support and resistance line? That way I can be sure I got to the best point. ”
In the bounce or leap trade method, we want to increase the odds in our favor and find some kind of confirmation that support or resistance will be maintained.
For example, instead of buying a headline, we want to wait for the price to jump and react before entering the market.
How to deal with trend line, support and resistance
If you are looking for a sale, you have to wait before entering to react to the resistance.
How to deal with trend line, support and resistance
By doing so, you are avoiding the trade when the price moves fast and breaks the level of support and resistance. It’s like catching a falling knife while trading in the Forex market and can be really deadly!
Failure (break)
In an ideal world, support and resistance levels would be valid forever, McDonald’s burgers would not be a health problem, and we use drones to travel within the city!
In an ideal Forex world, whenever the price hits the main support and resistance levels, we can trade and make a profit.
But the real world is different. The fact is that these surfaces are “often” broken.
Therefore, it is not enough to just trade in reactions and bounces. You need to know what to do when support and resistance levels are set!
In Forex trading, there are two ways to trade on failures: the aggressive method and the conservative method.
Aggressive or risky trading method
The easiest way to trade in failures is to buy or sell when the price convincingly crosses a support or resistance area.
The word “convincing” is key here because we only want to enter the market when the price easily crosses a significant support or resistance level.
The area of support or resistance must act as if one of Bruce Lee’s fatal blows had been dealt. We want the area to fall from the pain by breaking the price 🙂
Conservative trading method
Imagine this situation: You decided to buy the euro against the US dollar in the hope that it would rise after reacting to a support level.
Shortly afterwards, the support is broken and now you are left with a losing position, and an arithmetic balance that is slowly dying.
are you..
1. Do you accept your failure, pull out and close your position?
Or
2- Do you cling to your deal and sit in the hope of raising the price again?
If your choice is the second option, then there is no need to worry because you will feel and understand this trading method with all your being.
Remember, every time you close a position, you are somehow taking the opposite direction of the trade.
Closing a EUR / USD buy-in at or near the point of entry means that you are selling the same amount of EUR / USD.
Now, if the traders close and close the losing positions of the traders enough in the broken support level, the price will reverse and start falling again.
This phenomenon is the main reason why broken support surfaces become resistant whenever they are broken.
As it is guessed, one should be completely patient in using this phenomenon .
Instead of arriving at failure, wait for the price to the level of support or resistance is broken so Pvlbk out and then log back reaction price.
How to deal with trend line, support and resistance
Ultimatum!
In Forex , this does not always happen. “Re-testing” broken support and resistance levels does not always happen. There will be times when the price only moves in one direction and leaves you. For this reason, always use bearish orders and never, ever keep the hope of returning the price of a losing position.
These words really need to be bold. Frame it and place it in front of your eyes. In Forex, there is no such thing as “going up too much” or “going up too much”. Trade logically and calculatedly.
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