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Support And Resistance Strategy
The Support and Resistance Strategy is one of our favorites strategies to trade with when trading sessions are short. The reason why we say that is because there are lot more easier to find and their expires are shorter. Now, you need to choose the right support and resistance areas because if you pick weak ones, what will happen is that price bounce will not go in the opposite direction but it would rather just continue and break your support or resistance line. You can easily avoid this if you are following the right setups. Now, let’s get into the strategy itself!!
You will not be needing any kind of indicators, none.
So the first step that you need to do is make sure that the kind of market your actually in is ranging and not trending. This strategy works best when the market is not going in solid directions, you want your charts to be as wavy as possible, something like this.
Now that you have identified the type of market you are in. You just need to decided which line you’ll be getting the bounce from, either from the resistance or support line. Well… that’s pretty simple, you will need to choose the one strongest one. If price has touched multiple times from resistance and you notice that every time it reaches that price level, it immediately bounces off. That just shows that there is a really solid resistance area around that price level. That’s pretty much it, play the bounce when price touches it next time. You will earn a higher chance on ending in the money!!
1 Minute Chart= 15 Minute Expiry (Too Much Noise, Resistance and Support Levels are not very defined in this time frame)
5 Minute Chart= 30 Minutes Expiry ( Perfect for Day Traders, You can easily spot strong signals in this time frame, We personally use a 5 minute chart)
15 Minute Chart= 2 to 3 hour Expiry ( Those who have more time to trade, should use this time frame for the strongest areas of support and resistances levels)
1 Hour Chart: End Of Day ( if you want to take it really slow and you just want to make 3 or 4 signals a week with a high ITM performance, this time frame is great for that !!)
Support and Resistance Strategy Tips&Tricks
This strategy performs well when the market is calm and not too volatile due to the reason that when price has too much momentum, it will break support and resistance lines very easily so you want to avoid trading bounces when there are news been released. We would suggest using this strategy from 7:00 PM to 11:00 PM EST because there are less news around that time and We’ve personally seen that it works better when the market is not too active.
Always Remember that this is a Support and Resistance Strategy, you want the market to be ranging. Avoid using this when you see that price is not trending continuously on any areas of support and resistance. Remember to practice on a demo account if you need to!
Lots of people can identify a trend when they spot one but they can’t seem to get the right entry and the Trending Strategy will help you do that very easily. Now, all you’ll be needing is Two Moving Averages, A 100 period Red Moving Average and a 50 period Green Moving Average. You will want to keep your charts as clean as possible, you should concentrate only on the trend itself, Now your charts should look like this.
Trending Strategy Chart Setup
To identify the trend, you just need to memorize that when the Green SMA is above the Red SMA, It’s indicating an Uptrend. When the Red SMA is above the Green SMA, it is confirming a Downtrend.
So the first thing you’re going to do is determine the overall trend. If the current trend is in a downtrend, all signals should be taken along the trend, not against it!! Remember, That is why the strategy is named The Trending Strategy and not “Fight the Trend Strategy” ?? Same process applies to an Uptrend, all signals should be taken in the direction of the present trend.
Now that you know what direction you will be taking your signals, all you need to do is look for the entry. The way you do that is by deciding which moving average you’ll use as a trigger when you place the trade. As you can see above, you’ll wait for the first bounce to occur so you can determine which Moving Average you’ll work with. Prices tends to bounce from either the Red Moving Average and the Green Moving Average. That’s why confirmation should always be anticipated. The next time it touches the same moving average, you’ll just place the trade along the direction of the overall trend and you should be in a good position to nail the trade!!
Still don’t comprehend this?? Let me sum in up in key points then!
The Trending Strategy Follow Guide
For An Uptrend signal:
1) Green Moving Average must be above the Red Moving Average.
2) Get Confirmation, you’ll need the first bounce to happen so it helps you decide which Moving Average you will take the trade from.
3) Place A Call when price touches the Moving Average again.
For A Downtrend:
1) Red Moving Average hast to be above the Green Moving Average.
2) Get Confirmation, you must have the first bounce occur to help you choose which MA you’ll follow
3) Take A Put when Price touches the Moving Average again
Expires for the Trending Strategy:
1 Minute Chart= 15 Minutes Expiry
5 Minute Chart= 1 Hour Expiry (Highly Recommend this Time Period, Less Noise, Less whipsaws)
15 Minute Chart= 3 Hour Expiry ( too long for those who only want to spend 3 to 4 hours of trading )
Trending Strategy Tips&Tricks
The Currency pairs that we have found the trending strategy to work at it’s full potential are the main currencies. Those are the EUR/USD, EUR/JPY, AUD/USD and USD/JPY. They are the most traded and known for trending very effectively. We also recommend to trade this in the U.S/London Overlap which begins from 8:00 AM to 12:00 PM EST because that’s where the biggest market movements happen. To avoid any whipsaws, you must catch the trades right when the trend commence. You do not want to start looking for signals when the trend is about the end.Trending Strategy
Price action must be kept in mind, support and resistance areas are a bad sign of possible reversals. Do not trade this strategy if you see that there is no clear indication of where price is actually going. This is the Trending Strategy, you want price to be as smooth as possible. Now, If your still having trouble with the trending strategy, modify it to your comfort zone!! You can apply an MACD to help you get an easier entry. We personally don’t use it but not everyone trades with the same techniques.
Practice this on a free demo account until you reach an ITM performance you find acceptable.