This forex trading system is based on the reversal off support and resistance levels. The main strategy of this trading system is open trading position at support and resistance levels. If the market price touches and then bounces at any support or resistance level, it is likely that the market price will do the same thing at the same support or resistance level.
In the picture above USDJPY gives a potential resistance and support level (after the market price broke the resistance level, thus the resistance level became support). The arrows show the direction of the market price, you can set your stop loss level in the opposite direction of the support and resistance level. In other words, if you open sell position at resistance level thus your stop loss level should be above the resistance level. And if you open buy trading position at support level this your stop loss level should be below the support level.
You can change your trading direction is the market price broke the support or resistance level and followed the new direction of the market trend. You can use forex technical indicator such moving average indicator, stochastic indicator, MACD Moving Average Convergence Divergence, or RSI Relative strength index to filter up your trading. But if you are “naked trader” and you do not want any forex technical indicators in your trading chart, you can use candlestick pattern for your trading confirmation. Candlestick pattern that you can use in this trading system are shooting star, hammer, harami, engulfing, morning star, and other candlestick reversal patterns.
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