Currency Trading - How Important Are Support And Resistance Levels?

If you are a day trader one of the best ways you can trade forex is to trade around support and resistance levels. This is because the price will often react in a certain way when it is close to these key points.

These pivot points can easily be added to your normal price charts in most cases. After doing so you will be able to see each of the major support and resistance levels. This includes the central pivot point, as well as the two areas of support (S1 and S2) and resistance (R1 and R2).

You can also create your own areas of support and resistance if you so wish, which is what a few top traders at Options University have done in the new Forex Mastery course. However for most people the most common pivot points will suffice because these are used by the majority of traders all around the world.

You can trade these areas of support and resistance by watching how the price reacts when it gets close to each of these levels. For instance if the price rises to the first resistance level, and then consolidates around this level for several hours, then it may be worth going short if it breaks out to the downside because it has clearly struggled to break through this resistance level.

You can also use these support and resistance levels to determine where you are going to exit your current positions because the price will very often go on to take them out before bouncing back again.

So there are lots of ways you can profit from support and resistance levels when trading the currency markets.

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