Best Forex Training: This video (and article) on forex training will teach you how to effectively use support resistance levels to better time your trades in order to boost your trading performance. This strategy can give an edge against other traders.
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Welcome my friend to this forex training. By the way, what I’m going to share here also applies to stocks, E-Minis, commodities, future markets and so forth. What we’re going to share with you today is something that is quite simple, but the dollars run the details. So we want to give you the details here that while keeping things simple, just a few tweaks here, we make sure that you’re doing it as professionals do and not overlooking some of these things and just trading general ideas that really are not quite detailed enough. You know, Einstein is attributed with a quote of saying keep everything as simple as possible but no simpler. All right, so we’re going to be talking about support resistance levels – work very well in all markets and there is a good reason for that. Primarily, the reason is, well let’s draw a level here.
So what happens is when people see the market; when I say people, I mean the market participants. The market comes up to here and comes down, so now, as people are going to be buying back, everybody in this parakeet watches that level. So this is one of the nice things about these support resistance levels based on previous major swing highs and swing lows. Here we have a daily chart, that’s a common timeframe. Everybody sees that high, and you have the masses who are seeing this, so you’re going to get a crowd effect. The mass psychology comes into play and what’s happening when the market comes back up to that level is people are starting to say “well, last time we got up to this level, the general consensus of the market was that we’re not going to pay more than that.”
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This price over here, that’s what we’re going to pay. That’s getting too expensive. Now, will sentiment change? Sure, in three weeks, absolutely, sentiment can change, and often does, but it’s still in people’s mind. They’re looking at that, they’re considering it, and so that’s the psychology that’s going on. And that’s why of all the support resistance levels that there are, whether it’s FIBONACCI, whether floor trader pivot if you’re doing intraday trading or any other type of support resistance you might look at, I consider these major swing highs and lows on big charts like this, like daily charts, things that the masses are all looking at, to be the most significant and the most reliable support resistance levels of them all. So I often get questions that have the word best in them, in this case, would be “what’s the best support resistance tool to use?”
This is one time that I have a clear answer and it is major previous swing highs and lows. And major, I’m talking about you just look at it in a visually pops out to every human being. And that’s it. Now, because it does have that mass psychology, here’s the problem. As you look at that level, we see that the market went through it, went up to here and then it went down to there. Wait a minute, it didn’t work in maps because we drew it wrong. Great, thanks. So you don’t do it at the highs, you do not do it at the highs and you do it at the real bodies of the candle.
That real bodies for beginners mean these colored areas here which define the open and the close, not the high and the low. And the reason that we draw them there, that’s the professional way to draw your support resistance levels, is because the spot forex does not have a central exchange. So you are dealing with, first of all, all these different exchanges, all banks, people in all different countries, they’re getting different price quotes, have different spreads, right? So there are variances. And then we’ve got millions of people, retailers, a lot of them amateurs and they don’t know what they’re doing. They’re putting in orders all over the place and getting them in and out real fast.
Then you got your banks, your funds and then you got to your professional traders that are scalpers. So you’ve got all kinds of different levels of traders, size of traders, nationalities through different exchanges and brokers. Bottom line is that the market, as you chart it, is not going to stop to the penny, pip, or tick, in this case, the pip at various highs and lows. You can’t expect that there’s going to be a little more chaos there. So these highs here are that randomness, that chaos, that noise. And we want to, again, look at fair value; basically what the masses, the conglomerate of the mass psychology of all those people, are finding as the value of this high and that’s going to be the real bodies. So, when we draw up there, now all of a sudden you say, “It does hold here”.
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Now it doesn’t hold the low, but again, we discovered that that doesn’t matter. That’s just a little bit of extra noise. It does. When you look at the real body of the Red Candle, for example, there it is. Now look over here, there it is. So this is the proper way to draw it in order to allow for that noise. And don’t expect these highs and lows to come in at the exact pip. So that’s point one. Point two is when the market comes into these levels, look at your candlestick bars and you don’t need to use candlesticks necessarily, but I just think it’s easier to see the candlesticks and so again, we’re taking that same principle now and we’re using candlesticks.
I’m not going to, again, this is meant to be a very basic lesson, so I’m not going to use candlestick terminology. For those of you who don’t know the candlestick terminology, I’m going to just point out the principle. Again, the principle of it is when we get to these highs, look at that wick, that’s called the wick or the shadow. I like to call it the wick because candles have wicks. So you’ll see that the real body, the value is right there. That’s where, on this day, it opened and closed within that very narrow range, tested these prices up here and rejected them so that is a bearish pattern because we get that long wick up there and this again, this whole zone up here, that’s a rejection of those prices and that means that that is at least a short-term bearish pattern.
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That’s what makes it put in a high and goes back down to support. Now, when we get paid down to support, again, we’ve got a long wick down there so it rejected that as a push off of the bottom and it goes back up. When we come back up, you’ve got a long wick up there. And then here we’ve got a couple of long wicks and now you will not get this kind of long wicks at every hirgher high. So, for example, well actually we got one in there. I didn’t think I’m pretty good one right there and it may not be right at that very high. Might come in the second bar or so, but there are other types of candlestick patterns, engulfing patterns and things like that. So this is just one example that I’m pointing out and there’ll be others.
You want to study candlesticks in detail, actually, that would be a great idea. Today, we’re just pointing out a couple of things. Now, when we break through this resistance level, notice how the candle just flies through it. There’s no wick up here. We actually closed up. That’s how it breaks through. When it comes back to support, the wick goes below and it comes back to support. The wick goes below, but the close is above. Now, when we break down below that resistance or this time, resistance, this turned into support, now when it finally does break through support, what happens? It closes below the support level and closes down there. The problem is how do we determine when support is going to hold or, whether a support or resistance for that matter, is going to break and the market continues to slice right through.
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This is one way to do it. Look at your price action bars at those support resistance levels. This is one example. Do encourage you to learn more candlestick patterns in addition to these and it’ll give you more trigger itself. If you liked the video on Forex training, please understand that you have a moral obligation to pay forward the things that are helpful to us because you’re getting this for free. Please click on the share button below and pay it forward. Also, if you’re watching on youtube, go ahead and subscribe, that way you would get notified every time I create a new video, which is about once a week. Please click the thumbs up icon. And leave a comment because that really encourages me to keep creating more free tutorials for you. I love the interaction and finally have a special offer for my youtube subscribers.
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