Useful tips to identify support and resistance levels
A couple of pointers on the basics of technical analysis
At first glance, even
novice traders can locate specific levels at which prices inflect. Rather,
support and resistance levels form as orders cluster in places where many
traders expect the price to stop. In this way, it becomes useful to pinpoint in
advance these specific points in order to optimize any trading strategy.
Trading requires a wide range of skills, which sometimes can range from simple techniques to complex patterns. Being able to identify both support and resistance prices trends more towards the former, though this is no less important for any respective trading strategy.
Swing highs and lows
A swing is a distinct movement of the price chart. Highs and lows of such moves are the natural reference points for traders. Take note of swing highs and lows in the visible area of the chart.It is important to not to forget to check higher timeframes for levels that are not normally in your field of vision but that can still create obstacles near the current price. The more times a level stopped the price and made it reverse, the stronger it is.
Making use of psychological levels
Exploring pivot points
Pivot points represents an instance when math comes to trading. Pivot points are calculated on the basis of previous highs, lows, and closing prices. There are many custom indicators that will draw these levels for you.
One way is to look at Pivot Points Multi-timeframe indicator for MetaTrader. It shows a central pivot level, 3 support levels and 3 resistance levels for each timeframe. The indicator will let you see daily levels applied to any other timeframe you use.A good starting point is to analyze weekly levels of this indicator. They are redrawn after the end of every week and provide a very good idea of what the scope of the pair's movement will be like during the coming days.