In this article we will discuss a simple forex trading system, but accurate. This trading system is based on the support and resistance levels. The main concept if this trading strategy is trading at the support or resistance level. Here are the illustrations :
When the market bounces on any level, it’s likely that market price will bounce on that level again – with this situation we can open trading position sell at resistance and buy at support level. And if the market price breaks the level we can open trading in the direction of the breakout or open buy position if market price breaks resistance and open sell position if market breaks support level.
You can see in this following image.
In the chart above shows a strong level for USDJPY, the arrow marks reflect the market price direction. Set stop loss as a trading penetration we can open trading in the opposite direction. We can use 15-20 range (depending on volatility of the currency) level as confirmation. As guidance of break or reversal from the levels we can used :
- Breaks usually occurs if the market price often “rest” at the level
- Reversal usually occurs when the market price moves to far without reversal.
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