We would like to recall you to remember that, most of the following strategies come from stock markets. We followed strategies provided in specialized and trusted books. This strategy comes from the book “How to day trad for a living”. Many well-known traders have used these strategies and they have prouved to work. However, we, the author of this article, are not responsible for your own riks, mistakes and losses.
Support is a price level where buying is strong enough to interrupt or reverse
a downtrend. When a downtrend hits a support level, it bounces.
Resistance is a price level where selling is strong enough to interrupt or
reverse an uptrend.
Support or Resistance Trading
The Support or Resistance Trading is usually set a 5-minutes time frames:
- If an indecision candle forms around that area, that is the confirmation of that level and I enter the trade. I usually buy as close as possible to the support level to minimize my risk. Stop will be a break and a close of a 5-minute candlestick under the support level.
- Take profit near the next support or resistance level.
- Keep the trade open until you hit your profit target or you reach a new support or resistance level
- I usually sell half-positions near the profit target or support or resistance level and move my stop up to my entry point for break-even.
- If there are no next obvious support or resistance levels, consider closing your trade at or near half-dollar or round-dollar levels.
- A similar approach will also work when you sell short a stock below a resistance level.