How do you find Support and Resistance Levels in easy way?
What is support and Resistance?
Support and Resistance is an area or levels where price/market has reacted to in the past and can potentially react to again in the future.
Why do we have to draw in support and Resistance levels?
We shall draw support and resistance level because of possible trade opportunities arise at support and resistance levels.
Criteria & traits we look for to identify support & resistance levels.
You only need one of the traits listed below to qualify the level as support or resistance
#Swing high or swing low
#Multiple rejections
#Obvious and easy to spot.
#The move away was drastic.
#Acted as both support and Resistance.
#Recently respected or formed.
Process of Support and Resistance Identification:
1.Point extreme swing highs and swing lows
It does not matter how high or low price is,we never jump into trades blindly,we always wait for price action.
2.Multiple rejection that means more than one .More rejection means strong and stronger level.
Why is this important
Because it shows that traders took action at this same level during different points in time.
3.The levels should be obvious & jumps right out at you.
Why it is important ?
You want more traders (especially the big guys)seeing the level which increase the odds of a cluster of orders being placed at the level (always wait for price action).
4.The move away from the level was drastic & significant.(Not just a small bounce but a true reversal from the level).
5.The level has acted as both support and resistance(Turn support to resistance and from resistance to support).
Traders took action at this level more than once and during different points in time.
