What should I focus on when finding support and resistance levels?

Beginner Questions
1

Hello.

I read the support and resistance part of the Baby Pips Trading School. It was suggested that if the the chart is changed to a “line chart” it would be easier for traders to detect support and resistance levels. What should I focus on when trying to detect those levels? Whenever the price “bends” at least twice at a certain point, does that form a support/resistance level? Is there any tip to help me clear my chart and only draw important levels?

Thanks in advance.

2

There isn’t a reliable way of knowing which price level that has been visited before will hold again and offer support or resistance.

A line chart is drawn between the Closes only of each session / time period and the Close is probably the most important price of the day - every market player gets to influence it in free trading conditions and they have had the maximum possible time to affect its eventual level. That said, the Close in forex is artificial (usually midnight for your chart provider’s time zone) as the market continues to trade 24hrs / day Monday-Friday, so its not so key as in e.g. stocks traded on stock markets.

Plus a line chart excludes the highs and lows and these can be significant in identifying S/R.

Some people say that a price level that has confluence with a large round number stands more likelihood of being S/R. Or if it has confluence with a long-term moving average

In reality, you can only know if a price is S/R after the event. Whether you want to take the risk of waiting to find out or jumping ahead of time is an individual choice based on your tolerance for risk. That’s trading.

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3

Support and resistance represent key junctures where the forces of supply and demand meet. Trading ranges can play an important role in determining support and resistance as turning points or as continuation patterns. A trading range is a period of time when prices move within a relatively tight range. I think we should discuss more about price bends and I want to know is that is it true price level that has confluence with a large round number stands?

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