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Forex Support and Resistance Indicator Explained


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20 replies to this topic

#1
dhanpreet

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Knowing the major support and resistance levels is very important in forex trading and the best way to do this is through the use of several forex support and resistance indicators.

Most of you have heard of major swing points as support and resistance and do not know anything about indicators that can provide you with the same information. Therefore in this article, I will be sharing with you some of the best forex support and resistance indicators that I have used and proven to be pretty powerful.

1) Fibonacci Indicator – I guess most of you have heard of Fibonacci indicator, it is a powerful tool that is able to help you predict where the market might retrace to and then revert back to its original trend.

The Fibonacci is made up of retracement and extension, the important retracement support and resistance levels are 0.382, 0.500 and 0.618 and you will usually find the market respecting them. As the forex market is moving in waves of retracement and extension, you can then make use of these levels to help you to enter a trade in the direction of the trend.

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Another powerful feature of the Fibonacci is its ability to predict the likely extension and this information can be used to help you in your exit.

2) Forex Pivot Point – The pivot point is a tool that is commonly used by those big dog traders and thus it is a very reliable support and resistance level. Try plotting pivot point on your chart and you will see how many times the market get repelled by it or how many times the market move tremendously after breaking through it.

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Personally, I always plot a daily point point on my 15 minutes charts. In fact, you can plot an hourly pivot or even weekly pivot depending on your preference. I often use the pivot points as entry and exit targets in my trading and you can also do the same thing.

3) Bollinger Bands Indicator – Other than the above 2 indicators, you can also make use of the Bollinger bands upper and lower bands as support and resistance. Similarly, you will find the market respecting the bands as they are often repelled by it.

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here are some traders who have trading plan that simply trade the repulsion of the bands. This is especially effective when you are in a range. When you are in a ranging market, the price will always fluctuate up and down. When you see the price hitting the upper band, you can enter a SHORT trade (SELL) to profit from the repulsion. Similarly, you can enter a LONG trade (BUY) when you see the price hitting the lower bands.

The above are 3 effective forex support and resistance indicators that you should use in your trading as they are able to help you in your entry and exit. However you have to try each of them out on your demo account before you plunge into live account. Spend sometime to practice with them and make sure that they are able to fit into your trading plan.
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#2
omarelalfy

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Personally, I always plot a daily point point on my 15 minutes charts. In fact, you can plot an hourly pivot or even weekly pivot depending on your preference. I often use the pivot points as entry and exit targets in my trading and you can also do the same thing.
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#3
standart

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trading based support and resistance basically is long trading, may be the price will touch the opposite area in 2-4 days, depend on market volatility. but it could be reach in few hours only. this trading style is benefited than other trading style but we should not use more than 20% our deposit money. by the way, thanks for the information. I am still learning about fibonacci and pivot, luckily I found it thread.
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#4
indieover

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yes it is important to find the support and resistance on the chart. but it seems that not every body can get same support and resistance on the same chart. but knowing the resistance and support is important to know when to make an entry.
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#5
boniez

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yes it is important to find the support and resistance on the chart. but it seems that not every body can get same support and resistance on the same chart. but knowing the resistance and support is important to know when to make an entry.

yes, even i never think as you, actually we can share the support and ressistance point by the the other trader, but its consume a lot of time if you dont try by your self. my advice is to use bolinger band indicator
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#6
chuna

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Thanks for your lecture, it is good enough. I tried to learn the use of this support and resistance level but i could not. I now visit www.fxstreet.com and take their support and resistance that they place for free in their site. Now it is clearer for me. Thanks
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#7
standart

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yes, even i never think as you, actually we can share the support and ressistance point by the the other trader, but its consume a lot of time if you dont try by your self. my advice is to use bolinger band indicator


Bolinger band is very poweful to determine support and resistance if market sideways. but can't used to determine if the price break the previous support or resistance spot. more good if add 2 cross of MA line as additional indicator.
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#8
boniez

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Bolinger band is very poweful to determine support and resistance if market sideways. but can't used to determine if the price break the previous support or resistance spot. more good if add 2 cross of MA line as additional indicator.

Bolinger band line is suitable to determine support and resistance, but I think it is too flexible, so sometimes there are up past the upper or lower band. till now I still prefer using fibonnaci line to determine support and resistance, which i think more reliable regard teh support or ressistance point
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#9
standart

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@boniez
I get some good information how to use bollinger band and basically this indicator designed to trading in sideways market only. bollinger band recognize well the price range between support and resistance in sideways market. but this indicator not work if market trending.
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#10
boniez

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@boniez
I get some good information how to use bollinger band and basically this indicator designed to trading in sideways market only. bollinger band recognize well the price range between support and resistance in sideways market. but this indicator not work if market trending.

if you study the theory of BB_MA, then I'm sure you'll find out just how powerful this band Bolinger in determining the boundaries of dynamic price movement than the pivot
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#11
budado

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if you study the theory of BB_MA, then I'm sure you'll find out just how powerful this band Bolinger in determining the boundaries of dynamic price movement than the pivot

Can you elaborate this theory of BB_MA? Because I never heard this theory before. But I know bollinger bands. Anyway I don't think bollinger bands will going to replace pivot. as pivot is the simplest way of finding the average and the pattern of movements. In fact the resistance and support level are all base in pivot line. Without pivot their will be no resistance level and no support level.
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#12
rexway

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Taking a Range like were market closes and were market Open,Draw line on the Top call major resistance,and Down Major suport,when a market breaks these Line place your order,this is also another simple way to take suport and resistance.
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#13
ganthiraj

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I know about pivot but how to add fibonacci indicator in MT4 trading platform, maybe you know the way. because I want to add fibonacci indicator in my MT4 traiding platform. anyone know about that? thanks for answer it.
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#14
surya77

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Term support in forex trading refers to the area or a certain price level which is the lower limit of the movement of the price / price. Price / price tend to be confined and difficult to move down through the area.


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#15
Tboy22

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Well I personally think it is good for a trader to learn how to spot a support and resistance point on a chart and there are different techniques used to do so some are pivot point fibonacci retracement and price by volume chart and also indicator like volume should be used to determined valuable resistance and support in the chart
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#16
kim

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I draw support and resistance in my chart manually. I don't think so that an indicator can give you exact and good support/resistance levels as it draws them after some calculation. Whereas as an experienced trader you can draw them more perfectly.


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#17
omar-profits

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personally I use zigzag in indicate the support and resistance points, it is a very useful indicator where you can find the strong points to go buy or sell.

 

but you can't use zigzag only, I think zigzag with trend is a very profitable strategy.


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#18
tray22

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Support and resistant are the perfect way which we can use to predict the trend of the market yes the trend of the market can be predicted using the support and resistant of the forex market which is true but the problem is always how to draw it
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#19
adamsmiths

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The Fibonacci indicator tool is the best. 


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#20
catch

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thanks


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