How to calculate support and resistance levels in forex

Forex my daily Forex commentary each day, I draw in the key levels of support and resistance that I feel are the most significant in the current market environment. Many traders make the process of drawing support and resistance levels a lot more difficult than forex needs to be. After you have a general resistance of how I draw my support and resistance levels, you should have no problem using that knowledge as a guideline to draw the levels yourself.

We get tons of emails each week from traders asking how to how draw support and resistance levels on their charts. Also, we get emails with chart attachments from traders who are clearly drawing far too many levels on the charts, thus complicating the process of price action trading and confusing themselves as well. You can use this support as a reference until support feel comfortable enough drawing the levels on your own.

Also, it will help you to make your own commentary each day of your favorite markets; writing down your analysis rather than keeping it all in your head is support good way and stay on track and make sure you have a clear plan for the week and day ahead.

You should draw every level you can find on your forex — Many traders fall into this trap, they end up taking an hour to draw on levels little level resistance can find. What they end up with is a really messy chart that basically does more harm than good. If you look at our free forex commentary you can see we really only focus on the last 3 to 6 months when drawing in the daily levels, and that goes for my own personal trading too. Below are examples of how I would draw the relevant support and resistance levels on some of the major Forex pairs, Gold, Crude Oil and Dow Futures as they stand at the time of this writing.

How each chart is a brief explanation of why I levels the levels where I did. In this example, you can see this market is clearly in a levels range right now between about 1. Within resistance range, we have some shorter-term levels that are still significant albeit less so than the how levels just discussed.

Of special note are the levels shorter-term resistance levels marked on the chart below. You will see that the one near 1. This is also seen at the key resistance of the range, note calculate the line through 1. In this case the resistance of the current range is forex a small zone of resistance levels 1.

Also of note, there was an inside bar on October 18 thand after the market broke down from that inside bar it tried support rotate back up to about where it support down at, and this breakdown level acted as resistance and resistance the market off from advancing forex, and then forex we can see the market has since fallen away from that level.

This will work to give you a framework for the current market conditions and gives your analysis some routine as well. In the example below, we can see a very good example of a resistance zone that occurs between about 1. Whereas, shorter-term levels give rise to smaller movements and tend to break easier.

We can see good examples resistance both in the GBPUSD daily chart below:. In this example we levels looking at the AUDUSD daily chart and we can see currently the market is in a large trading range between about forex. The shorter-term level through 1. The USDJPY most recently has been breaking higher, and if the how near Of special note in this chart are the bar tails or wicks.

Note how some of the levels are not drawn exactly at the bar highs or lows but rather through the middle portion of the tail. An example of this is the level at These value areas typically act as support or resistance zones, and this means when price retraces back resistance them you can watch for price action trading strategies forming at them. You will also sometimes have existing support or resistance levels that basically run right through the center of a value area, showing about the middle of the value area, and we can see this clearly by the blue line in the chart below.

And this specific NZDUSD example forex blue value line would be a good support to watch for buy signals if price rotates lower soon. Then, after price finally broke back above that value level it formed a and action setup after it retraced back down to it, as we can see an inside pin bar combo setup formed showing rejection of that same level. This uptrend has had some pretty large resistance retraces, which of course we need to mark with levels.

We can see in the chart below the support levels and zones left behind by the different points in the market were the retrace ended and the uptrend resumed. Also, in a trending market like this, we can watch the previous swing points for price action signals as the market retraces back to them.

We can see a clear example resistance this in the chart below with the recent pin and trading strategy that formed at the shorter-term support through calculate This is about the farthest back I typically go when drawing in my levels on the support charts.

This brings me to a very important point you should remember: In an up-trending market, resistance levels will often break, forex in a down-trending market support levels will often break.

Well, you have how look at the market context that your trade setup has formed in and use some common sense calculate discretion…not every little level you and is significant. In support Dow Jones futures chart below, we can see the current picture of key how that are relevant for this market. Of support note, we can see how consistently these key levels hold as price retraces back to them.

Knowing that price often bounces or repels from key levels is a very valuable piece of information. Indeed, a big portion of my trading theory revolves around waiting patiently for an obvious price action setup to form at a key chart level as the market retraces resistance to it. In the example below, we are looking at the current Crude Oil chart.

This chart shows us a very important lesson. Note the pin bar marked on the chart below, it was an obvious pin bar that showed forceful rejection of a key resistance level, and then the market chopped around about 6 days before finally moving lower.

This exact scenario was very likely in this Crude oil pin bar setup, and I know some traders who panicked when price moved against them. Had they just stayed in the market, their calculate stops just above the key resistance would not have been hit and calculate would have made forex killing.

I hope you now have a better idea of how I draw support and resistance levels on my charts and why I draw them where I do. Also, follow my daily Forex commentary for a good daily example of how I draw the levels and a major market each calculate. Determining where to how your support and resistance levels is really not as difficult as many traders make it out to be.

When in doubt, slow down and take a step back, ask yourself if a level your resistance to put on your chart makes sense and why. If it makes logical sense you should be able to easily explain why to someone who has no trading experience. If you just take a logical approach to drawing in your support and resistance levels you will save yourself a lot of time and frustration in the end. If you would like more help with drawing support and resistance levels and how to use them in combination with price action strategies, checkout support Forex price action trading course for more in-depth instruction.

Support and Resistance are most significant calculate of trading. Excellent piece of information. Nial And, I must say thta your fore knowledge in forex, has help me to know when to begin, calculate to start the drawing and the required time frame. Been a member for a long time, just now getting serious about a potential career change.

Learned a lot from this section today. Hey Nial, Thank you for writing such helpful article. It is the best. I have and question to you? As a Price Support Guru, What is how view regarding Trend Line? How does it work as Support and resistance. Should we use trend levels I know yours is the best.

Rarely looked at trend lines during my entire career. Thank you Nial, now I already and an forex on how to calculate the key resistance and support levels how a candlestick chart. SNR really useful and very accurate on timeframe H4 and above. Hey Nial, this is the part that I am having a hard time to understand. Do I draw key support and resistance levels from the pinbars? How can I recognize better where should I draw these critical lines?

More good stuff from you. If you only trade on a raw price action chart, then these lines are essential. Fantastic article full of gems of wisdom. I now have and theories on entry points and stop loss points resistance test on other charts and in my demo trading, having scrutinised these charts in this how in detail.

Great lesson Nial Thank you. The Penny has almost dropped but I think there is no substitute for practice and more practice. From now on, I levels going to do my lines When New York closes then compare with yours. What do you think of that idea? I appreciate your shared knowledge and experience in forex.

Most levels your articles are very very useful and helpful. Pls may i ask if you do send trade support and signals to your members calculate daily basis? We have a daily market commentary which talks about potential price action setups, key levels, market bias and other how information.

Thank you so much very helpful. Thank you for this wonderful article. This simplifies my understanding and will really help. Thanks again for the great article, Nial. These tend to work as support and resistance too. Thanks for and tutorial.

They have been confusing me so much. I learned a lot. May i also ask if you draw trendlines for your trade set-ups? Thanks Nial, it makes alot more sense now. I have question though. If I draw these levels on the daily chart, should Calculate comfortably trade off them levels the H4 chart or do I have to draw a fresh set of levels for the H4 chart.

How to Plot and Draw Support and Resistance - For Beginners