Definition

Support and resistance (S&R) are price zones where the market tends to react: support is where price may bounce up, resistance is where price may drop. With price action, we identify these zones based on actual price behavior rather than arbitrary lines.

How to Identify

Swing highs/lows: Clear peaks and troughs on the chart are potential S&R zones. Draw a zone instead of a precise line.

Volume: Price areas with high volume often act as strong S&R.

Psychological levels: Round numbers (1.2000, 1.2500) often serve as S&R.

Candle patterns: Pin bar, engulfing, inside bar at S&R zones confirm a reaction.

Example: A bearish pin bar at resistance shows strong selling pressure.

How to Trade

Identify S&R zone on higher timeframe (H4, Daily).

Wait for price action signal at that zone (e.g., pin bar, engulfing).

Enter when the confirmation candle closes (breakout or bounce).

Place stop loss above/below the S&R zone with a reasonable distance.

Take profit at the next S&R zone or use trailing stop.

Real example: On EUR/USD H4, price touches resistance 1.1050 and forms a bearish engulfing. You sell, stop loss above engulfing high, take profit at nearest support 1.1000.

Common Mistakes

Drawing S&R too precisely: Markets rarely hit exact lines; use zones.

Ignoring higher timeframes: Daily S&R is stronger than M15.

Trading against the trend: S&R is only valid when aligned with the main trend.

Not waiting for confirmation: Entering immediately at zone often gets stopped out.

Summary

Price action S&R helps traders trade with higher probability. Practice identifying zones on charts and combine with candle patterns for strong signals.

Content is for reference only, not investment advice. Forex trading carries high risk.

Price Action Support and Resistance

Definition

How to Identify

How to Trade

Common Mistakes

Summary

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