Support and resistance is the most used method for FOREX trading. This is the reason it is one of the first strategies that Apiary Fund reviews. On top of being the most used, it is also one of the easiest methods to use in one's trading for the most part. What the areas, areas being the key word, of support and resistance show is a reliable spot for reversals or breakouts. Now technically, at any point and on any candle, you can have a point for a breakout of price or a price reversal. The support and resistance, however, shows a reputable place and an easier entry point than just any random spot on the candle.
One common misconception about support and resistance is that it has to be old to be reliable. While yes, long-held areas are extremely reliable, those long-held supports and resistances had to start somewhere. As long as there is a series of data points, the more the better, on a certain price point, you can use that. Double tops/bottoms and triple tops/bottoms have specific names even though they are a form of support and resistance due to fewer data points. You don’t hear about quintuple or sextuple tops/bottoms, you just hear a support or resistance is showing. Even if it is a recent movement, it can still be used, as long as there’s data to back it.
On top of the flat support and resistance, they come in slopes as well. Colloquially, slanted forms are referred to as channels as long as the slants are parallel. If the support and resistance are perpendicular to each other, you have a pennant. There’s also falling and rising wedges, where a support or resistance is occurring as a faster rate than the other; and a triangle, where one of the two is constant and the other has a slope. All these types of support and resistance trends have different breakout points and typical direction of the breakout. For more detail about each of these varying types of support and resistance, you can look at the Apiary Fund reviewed them in: ‘How to Identify Trends in the Forex Market’ article.
Another great tool that can be utilized in support and resistance trading is multiple time frames. Looking at a support and resistance on a smaller time frame lets you know where a reversal or breakout will occur, looking at the same pair on a larger time frame can give you a more likely end picture for the smaller time frame and let you enter the trade early. Also, matching support and resistance trends is a powerful strategy, commonly called the “Alignment Strategy,’ where you align multiple trends on multiple time frames.
All in all, knowing how to spot a support and resistance, no matter what kind, has the ability to aid in your trading. Trading is knowing what to look for, and knowing what what you are looking at does. These trends that emerge can let you get into trades earlier than indicators may dictate and allow for more trades to be placed in a set period of time while you are waiting for a different trade to begin. Study the support and resistance and know what it’s telling you. Apiary Fund reviews these throughout the education to make your trading the best it can.