As a trader, I cannot stress enough the importance of support and resistance. Support and resistance is one of the most popular technical analysis tools in the trading world. Moreover, the concept of support and resistance is the basis of many advanced trading strategies as well. In fact, many of the advanced trading strategies taught in this book including Harmonic Pattern and Elliott Wave are also partly based on the concept of support and resistance. If you do not have a good understanding of support and resistance, it is recommended to stay away from day trading. Many educational materials mention support and resistance but in a nutshell. Different textbooks only discuss it in several different angles and it is difficult to find a unified language that talks about support and resistance. Many books will suggest that support and resistance consist of three or more points that touch the same line. On the other hand, some books may mention that support and resistance are the two relevant levels that you should pay attention to while you are trading. They are right. However, compared to its immense popularity, most textbooks only give a very brief description. As in the case of Fibonacci analysis, support resistance is another technique that lacks scientific significance. In this book, we will use the concept of a balanced fractal wave to visualize price action around support and resistance. At the same time, visible price action can be used further to derive entry and exit for your trade. In addition, we will show you several important categories of support and resistance for your trading. To visualize price action around support and resistance, we use the Peak Trough Transformation indicator with the ZigZag indicator. We use the free Peak Trough analysis tool from the website: www.algotrading-investment.com.
● horizontal support and resistance
● diagonal support and resistance
● Determining support and resistance using the pattern and model method
About this article
This article is the portion taken from the draft version of the book: The Scientific Guide to Price Action and Pattern Trading (Trend Wisdom, Cycle, and Fractal Wave). The full version of the book can be found from the link below:
You can also use the Ace Supply Demand Zone Indicator in MetaTrader to perform support resistance analysis. The Ace Supply Demand Zone Indicator is a non-repaint and no lag indicator with a lot of powerful features built on it. In particular, you can use it as horizontal support and resistance for your trading as well as trend prediction trading strategy.
Turning point probability and trend probability can be measured using the Fractal Pattern Scanner at each price movement in your chart. Turning point probability can improve the accuracy of trading with horizontal support and resistance. You can watch this YouTube video of how you can turn support resistance into a lethal strategy with tipping point potential in Fractal Pattern Scanner.
Below is the landing page for Fractal Pattern Scanner in MetaTrader 4 and MetaTrader 5.