Looking for a reliable broker for forex trading and a great platform for Forex Trading? Check out this review of IVG Capital, the go-to choice for legitimate retail traders. Learn why IVG Capital is trusted by traders for forex and crypto trading, and discover the benefits of using Match-Trader. Whether you’re a beginner or an experienced trader, IVG Capital offers a range of tools and resources to help you succeed in the trading world. Don’t miss out on this opportunity to elevate your trading experience with IVG Capital!
At the heart of IVG Capital’s offering is the Match-Trader platform, which now includes TradingView, the go-to charting package for many retail and professional traders. This blog explores the importance of Support & Resistance levels and how they are the most important tools in a trader’s arsenal.
www.ivgcapital.com
How to Plot Support and Resistance Levels
You may log in to the Match-Trader Platform through the IVG Capital website or use the URL www.platform.ivgcapital.com.
You may have seen our previous video on Match-Trader charting with its array of graphic tools, indicators and settings.
One of these tools is the Horizontal Line.
Let’s take a look at one on a longer-term chart like the daily chart.
Click on the pencil icon, which is the list of graphic tools and select Horizontal Line.
Place the first line at the lowest common point of price action and we can see where sellers tried to push the price lower but buyers took over and sent price action back up.
This is called a level of Support and we can see that, if we scroll back in time, this level was important before.
You will also note, that the price at which the level occurs is a round number.
You will hear the expression “Key Level” very often and this is one of them.
Of course, you may change the colour and thickness of the line to suit your taste.
Now, let’s take another line and find the key level at the highs.
This is called a level of Resistance and is the highest price that market participants were willing to pay until sellers took over and price action fell.
In this video, and in your trading day, plotting many levels of support and resistance is critically important so let’s switch to the TradingView platform by clicking here.
You will note a huge variety of graphic tools available and, again, pick the horizontal line.
Plot the extreme highs and lows like before and change the colour and line thickness if you wish.
Now, find a level in between the two extremes but instead of plotting a new line, click on the 3-dot menu and select “clone.”
Or, you may copy and paste with the usual C and V keys on your keyboard, just like you would copy and paste text.
Now use these lines to find other important levels.
You will note, as you scroll back in time, that very often levels of support used to be levels of resistance and vice versa.
Again, the term “Key Levels” comes into play.
Plot Support and Resistance on Multiple Time Frames
Now, let’s move down to the 4-hour chart and, with more detail, we can see more important levels.
Keep moving down in time frames and plotting more levels, until you reach the time frames in which you usually trade.
Leave these lines on your charts as permanent fixtures and periodically update the charts of your favourite instruments.
Why Support and Resistance Levels Are So Important
Let’s look at a practical reason why these levels are important.
Here we have a level where an order may have been placed by a big bank, currency exchange company or a fund, or a combination of many institutions.
The full orders may not have been filled at the first instance so the traders, and/or the traders’ computers, wait until the price reaches this level and then they try again to fill the order.
And again.
So, as a trader, you may take advantage of this activity by waiting for price action to bounce off a key level and head in the opposite direction.
Of course, be disciplined, follow your strategy, and wait for confirmation like candle closure or a technical indicator showing a reversal.
Now, you have a safe level to place your stop-loss and we already have a possible exit point at the next key level.
Another way to use these levels, where we do not have a reversal, is when we have a break of support or resistance.
We still need to be disciplined, wait for confirmation, and look at a possible exit point at the next key level.
Some other important rules are:
Never sell any instrument too close to a level of support.
Price action will likely surprise you, bounce off support and quickly find your stop loss.
Of course, buying too close to a line of resistance will likely yield the same result.
Levels of support and resistance are key elements in many chart patterns like double tops and bottoms, head and shoulders, descending triangles and ascending triangles.
We will look at these in other videos.
That’s all for now. Come back soon for more videos and reviews on IVG Capital, Match-Trader and TradingView.