Support and resistance indicator for binary options

Support and resistance - Wikipedia

How can any technical trader even think of trading anything at all without having a complete understanding of how it works or at the very least an eye for identifying it’s unique signature in the charts?

In the chart below, we see an example of support and resistance levels containing price within a trading range. A trading range is simply an area of price contained between parallel support and resistance levels like we see below (price oscillates between the support and resistance levels in a trading range).

Since moving averages are derivatives of price as most indicators are, they lag price. When you think that a moving average is acting as a support and resistance indicator what you are really seeing is the moving average catching up to price.

Proactive support and resistance methods are "predictive" in that they often outline areas where price has not actually been. [3] They are based upon current price action that, through analysis, has been shown to be predictive of future price action. Proactive support and resistance methods include Measured Moves, Swing Ratio Projection/Confluence (Static (Square of Nine), Dynamic (Fibonacci)), Calculated Pivots, Volatility Based, Trendlines and Moving averages, VWAP, Market Profile (VAH, VAL and POC). [3]

When price makes a new High and then retreats, sellers who missed the previous peak will be inclined to sell when price returns to that level. Afraid of missing out a second time, they may enter the market in numbers sufficient to overwhelm buyers. The resulting correction will reinforce market perceptions that price is unlikely to move higher and establish a resistance level.

Trading the synthetic pair can be extremely profitable if done properly. Though there are many different ways of trading the synthetic pair.

Once an area or "zone" of support or resistance has been identified, it provides valuable potential trade entry or exit points . This is because, as a price reaches a point of support or resistance, it will do one of two things: bounce back away from the support or resistance level, or violate the price level and continue in its direction – until it hits the next support or resistance level.

So when looking at the chart above you will see that the indicator establishes say a level of support. That support will stay in place until another level is determined. The new level the “takes over” from the old level and repeats the process. This happen in an uptrend and in a down trend. Pretty neat.

If prices reach a historical price ceiling (resistance), typically it is expected that prices will stop at that level, unless some other external impetus like great earnings can send prices past historical resistance; therefore, a potential sell signal is triggered when price touches the historical resistance line.

Do you have any suggestions or questions regarding this indicator? You can always discuss Support and Resistance with the other traders and MQL programmers on the indicators forums.

One of the most common questions we're asked is how to determine resistance and support lines - especially which ones are the most important since based on how we draw them, almost every level can be an important level. Quite simply put, there are many ways to draw support and resistance lines but only a few correct ways to do so.

It is not uncommon for a support level to eventually become a resistance level, or vice-versa. Once price breaks above a resistance or falls below a support, that level typically reverses its role. In the following example, we clearly see a resistance being broken, and subsequently becoming a support.

Understanding the concept of support and resistance in trading can drastically improve your short-term investing strategy.

If the price is moving lower, it will eventually hit a “floor” where buyers enter the market in such sufficient quantities that they overpower the sellers and stop the price from going any lower.

A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk-free environment. Results achieved on the demo account are hypothetical and no representation is made that any account will or is likely to achieve actual profits or losses similar to those achieved in the demo account. Conditions in the demo account cannot always reasonably reflect all of the market conditions that may affect pricing and execution in a live trading environment.

Our Research and Education center offers daily updates on all the major trading sessions along with multiple daily briefings on all critical market events which daily shape the global markets.

Buying or selling of a currency pair comes at the end of a due diligence process. Traders must have an idea why they want to go short or long.


Forex Support and Resistance Information - DailyFX


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