Support Turned Resistance Forex Trading Strategy

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By Richard Naxon

The support turned resistance forex trading strategy is a price action trading system that is based on trading previous support levels which now act as resistance levels.

Confusing right?

Let me explain…

There will be times when price will break a support level and head down. After a while,price will head back and hits the broken support level and guess what happens?

The broken support level now acts as resistance level and pushes back price down.

Here is a chart of what I’m talking about:

Currency Pairs To Trade

You can use this support turned resistance forex trading strategy to trade any currency pair, from the major currency pairs to AUDNZD, EURGBP etc.

 

Timeframes To Trade

Any timeframe is suitable for this support turned resistance forex trading strategy but I suggest you use 15 minute tiemframe and above.

Any Forex Indicators Required Here?

You do not need to include any other forex indicators here. What you really need is to know the different types of bearish reversal candlestick patterns which will give you your sell signal.

How To Trade Support Turned Resistance Forex Trading Strategy

Be aware of obvious support levels on your chart and if price breaks them and heads down and later starts going back up, one of the first questions you should be asking is this: where is price most likely to reverse from?

Is there a broken support level nearby where price can reverse from? If that is the case, you need to pay attention to the price action as price hits the broken support level and watch to see if bearish reversal candlesticks form and use that as your sell signal.

Here’s how to trade:

  1. place a pending sell stop order 2 pips below the low of the bearish reversal candlestick that forms when it hits the previous support
  2. place your stop loss 5-10 pips above the high of the that bearish reversal candlestick
  3. for take profit, you can use risk:reward ratio of 1:3 to calculate it or if not, use previous swing lows as your take profit level.

 

Advantages of The Support Turned Resistance Forex Trading Strategy

  • excellent risk:reward ratio
  • you will see these patterns form in all timeframes frequently, giving you a lot more opportunities to trade
  • really simple price action trading system with easy trading rules

Disadvantages Of The Support Turned Resistance Forex Trading Strategy

  • price spikes can happen taking out your stop loss only to see price falling down after taking out your stop loss.
  • no line is a line drawn in concrete and price will go where it wants to go depending on supply and demand so expect support turned resistance levels to be violated.

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