If you look carefully at the chart, it is easy to note a common situation: the price of the asset is rising, it reaches a certain level, and then reverses downward. Below, it also seems to rebound off an invisible obstacle and again moves upward.
The obstacles below and above are called levels of support and resistance. Upon reaching them, the chart is likely to reverse in the opposite direction. This is the reversal moment you need to notice in order to make a profit.
IMPORTANT: If the price continues to move and crosses the level, forming a new minimum or maximum, we conclude a trade only if (and when) the price crosses the level (going back) again!
This strategy works great on a flat (price movement without a clearly defined direction up or down), when the price of the asset is moving in a certain range between the levels of the minimums and maximums on approximately the same horizontal line.
It is important to remember that the levels could suggest the suspension or end of the trend. Don’t ignore them.
4 steps
1
STEP 1
Choose the ” Candlestick” chart type and “1-minute”time period.
2
STEP 2
Select the asset you want to trade on (for example, EUR/USD).
3
STEP 3
Find the nearest minimum (the lowest point) and maximum (the highest point) on the chart and mark those points with horizontal lines using the “Horizontal”tool.
The maximum level from which the chart begins to move downward following growth is called the resistance level.
The minimum level from which the chart begins to grow after falling is called the support level. The level is considered a strong one if the chart pushes off it a few times.
4
STEP 4
Watch and wait for the right moment to make a trade.
Make a trade UP if the following happens:
The price goes DOWN and approaches the MINIMUM level marked earlier by the horizontal line. After the price touches the level and reverses UP, we conclude a trade for 5-15 minutes.
Make a trade DOWN if the following happens:
The price goes UP and approaches the MAXIMUM level marked earlier by the horizontal line. After the price touches the level and reverses DOWN, we conclude a trade for 5-15 minutes.
IMPORTANT: If the price continues to move and crosses the level, forming a new minimum or maximum, we conclude a trade only if (and when) the price crosses the level (going back) again!
This strategy works great on a flat (price movement without a clearly defined direction up or down), when the price of the asset is moving in a certain range between the levels of the minimums and maximums on approximately the same horizontal line. It is important to remember that the levels could suggest the suspension or end of the trend. Don’t ignore them.