Support and Resistance Forex Monthly Strategy
Long trade entry:
- Identify where support zones exist on the monthly chart. That includes both horizontal support due to past lows/highs but also support due to falling or rising trendlines that connect several past lows or highs.
- Look for a bullish signal to occur at the support zone. Either a bullish chart pattern or a bullish signal from the indicators.
Long trade stop loss:
- Place stop below the low of the bullish pattern
Long trade exit and targets:
- Place target at the next resistance higher
- Or exit when overbought levels are reached on the indicators.
Short trade entry:
- Determine the most important resistance zones on the monthly chart
- Look for convergence of bearish signals at resistance
- Enter once the above conditions are satisfied
Short trade stop loss:
- Stop behind the top of the bearish pattern
Short trade exit and targets:
- Target the next support down
- An oversold signal on momentum indicators can also be a reason for an earlier exit.