The ONLY Support & Resistance Trading Video You'll EVER NEED!

Introduction

This tutorial provides a comprehensive guide to understanding and applying support and resistance levels in trading. Support and resistance are foundational concepts in technical analysis that can enhance your trading strategies across stocks, forex, and cryptocurrencies. By mastering these concepts, you can make informed trading decisions and improve your overall market analysis.

Step 1: Understand Support and Resistance

• Definitions:

  • Support: A price level where buying interest is strong enough to overcome selling pressure, causing the price to bounce back up.
  • Resistance: A price level where selling interest is strong enough to overcome buying pressure, causing the price to drop.

• Visualizing Support and Resistance:

  • Use charts to identify these levels.
  • Look for areas where the price has reversed direction multiple times.

Step 2: Identify Resistance Levels

• Mark Resistance on Your Chart:

  • Use the candle body open or close to draw resistance levels.
  • Options include:
    • Horizontal lines
    • Rectangle shapes indicating a zone of resistance

• Trade Using Resistance:

  • When the price reaches resistance, anticipate selling pressure from trapped buyers.
  • Consider entering a short trade when the price approaches this level.

Step 3: Identify Support Levels

• Mark Support on Your Chart:

  • Similar to resistance, use the candle body open or close to draw support levels.

• Trade Using Support:

  • Observe price behavior at support. A bullish candlestick pattern at this level indicates potential buying pressure.
  • Consider entering a long trade when the price approaches this support level.

Step 4: Recognize Support and Resistance Flips

• Flipping Levels:

  • When resistance is broken, it becomes support.
  • When support is broken, it becomes resistance.

• Application:

  • After a breakout, wait for a price retracement to the new support level (formerly resistance) for potential buying opportunities.

Step 5: Avoid Chart Clutter

• Maintain Clean Charts:

  • Avoid overloading your charts with too many support and resistance levels.
  • Focus on significant levels by starting your analysis on higher time frames (monthly, weekly).

• Organize Your Levels:

  • Use the object tree on TradingView to organize, group, and label your support and resistance levels.
  • Create folders for different time frames (monthly, weekly, daily) to keep your chart clean.

Step 6: Use Templates for Efficiency

• Create Templates:
  • Set up templates for drawing support and resistance levels with specific colors, styles, and names.
  • This allows for quick application without cluttering your workspace.

Step 7: Practical Trading Example

• Analyzing Bitcoin:
  • Look for areas where price has previously acted as resistance and is currently testing this level as support.
  • Wait for bullish momentum confirmation (e.g., a bullish candlestick) before entering a trade.
  • Set stop-loss below the recent swing low and target recent highs for profit.

Conclusion

Understanding and applying support and resistance levels is crucial for effective trading. By recognizing these levels and maintaining chart hygiene, you can enhance your trading strategies. Continue practicing these concepts and explore further educational resources to deepen your knowledge and skills in trading.