Horizontal Support and Resistance Levels (Part I)

There are tons of things that I could write regarding the different ways to trade and what trading methods suits your personality. My goal is to show you how to merge everything together to help give you an edge in your trading. However, I will start by discussing the most effective tools in my toolbox: horizontal support and resistance levels

These are the most important elements of my trading. But it seems that most retailers dismiss them. They would rather follow some green/red light robot than think for themselves.

There are five things that I look at when marking up my support and resistance levels:

1) I want to look at the higher time frame charts. These are the levels with the levels with the highest weight. Banks and large funds pay close attention to these.

2) I am looking for levels that attract a lot of attention over time. (This means that price gets rejected from these levels over and over again.) The other important factor here is that price rejections should occur on both sides. This means that if the level holds as resistance at one point, is then broken and price uses it as support and it adds more weight in terms of importance down the line.

3) I want to see price get to the level after a nice run. If price has to travel 100 pips in a day to get the level, it adds more weight (in my books) that the level is likely to hold. I must add that this is not always the case. However, I usually get a good “heads up” as to whether I should act or stay aside from monitoring live news feeds.

4) I like to see a good time space between when price hits the level and when it comes back to the previous level. This is before I even consider a trade. There are a few reasons why I like to see this but the big one is orders. Why? These big levels will attract a lot more attention if there is time for them to stand out.

5) The other thing I want to watch are past price rejections. I like to watch highs and lows on the chart. This gives me a good indication of how strong the market is. For example, if price hits a level and gets rejected, comes back again a few days later and gets rejected again (this time unable to take out the lows from the first rejection), I will be less inclined to want to trade.

Get some practice and use this little list to find horizontal support and resistance levels. You will soon be trading very high probability areas where large institutional flows are sure to be watching.

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Source:: Horizontal Support and Resistance Levels (Part I)

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Jarratt Davis
About the Author
Jarratt Davis is the world’s ranked #2 (2008-2013) Forex Trader by Barclays FX Hedge Index, following years of mastering his art as a self employed trader Jarratt has now entered the field of education and delivers the most robust Forex education package on the market. Jarratt’s mentorship is one of the only programs on the market that is conducted by a verified professional trader. Forex Alchemy readers can get the FREE mini course where Jarratt gives away some of his secrets to success by Clicking Here... [space height="20"] [social type="facebook"]www.facebook.com/JarrattDavisForex/[/social] [social type="twitter"]https://twitter.com/jarrattdavis[/social] [social type="google-plus"]https://plus.google.com/+JarrattdavisForexTrader/[/social] [social type="youtube"]https://www.youtube.com/user/JarrattDavisForex[/social]

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