Today we will learn about how we can use support and resistance zones to trade forex in a Trending ( uptrend or downtrend ) Market. You can use this method as a trading idea or use this method to help any other trading idea as well. A simple forex trading idea by Prathilaba Sri Lanka.
( Uptrend in a trending market )
What is a trending market ? A trending market can be either a uptrend or downtrend. Basically the price will go up like climbing a mountain ( uptrend. Just like in the image above ) or fall down like climbing down a mountain ( downtrend - refer image below few paragraphs.. ).
If you carefully look at the above image, you will notice that the price gradually moves up in a pattern ( uptrend ). You will then notice that price is at the highest level at some points ( These are called higher highs in general ) but does not go above that zone marked with two dashed lines on top. So this particular area is a strong resistance zone and price is unable to go pass that area. Higher the number of higher highs means a stronger resistance zone ( How to draw resistance lines in a forex chart ? look for at least 2 to 3 higher highs and mark the zone. These zones are more effective in 1hr or higher time frameworks ).
Now look at the two dashed line at the bottom area of the image. You will notice that the price reaches that lower area but does not fall below that zone. This is called a strong support area as price was not able to break that area in the uptrend market. It makes some lower points as well right ? These are called lower highs.( How to draw support lines in a forex chart ? look for at least 2 to 3 lower points and mark the zone. These zones are more effective in 1hr or higher time frameworks just like higher highs ).
Look at the image above once more. Price tends to go up gradually right ? It means an uptrend market. So always trade with the trend to be on safe side. You can place a 'BUY' (green button) order when price reaches lower support zones and start rising.
If market is an uptrend = Place 'BUY' order at lower support zones and start rising.
What shall I do, if the market is in a downtrend ? ( where price gradually falls. Refer image below )
If market is a downtrend = Place 'SELL' order at higher resistance zones and start falling.
( Downtrend in a trending market )
Generally if it is an uptrend, it will not be able to make higher highs and you might notice the rise in price is low. Similarly it will be the opposite in a downtrend. Also uptrend and downtrends support and resistance zones can get breached when a high impact news get released. Eg when central banks adjust the interest rate, jobs related news, trade conflicts, wars or epidermic etc.. ( You can use Investing.com website or app to know about the trading related news )
So in situations like that, better to stay away from trading until it makes a new trend or market calms down.
Yes, you can use this method for any type of asset or type of trading trading brokers.
Patience and Practice will help you for better trading results. You can use forex candlestick patterns and forex chart patterns as well to get better results but sometimes keeping things simple is the best way to go =).
Make sure you use a reliable forex broker. Refer our Top Forex Brokers list for a good broker for forex trading ! Also refer ' how to trade forex in a range market ? ' article as well.
Good Luck ! 🙂
( RISK WARNING: YOUR CAPITAL MIGHT BE AT RISK. )
General Risk Warning : The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
ට්රේඩින් යනු ඉහළ ලාභයක් ලබා ගත හැකි ක්රමයක් වුවත් දැඩි අවදානමක්ද තිබෙන ක්රමයකි. එමනිසා අවදානමක් ගත හැකි අයට ට්රේඩින් වඩාත් සුදුසු වේ. විශේෂයෙන්ම ණයට / පොලියට ගත් මුදල් හෝ එදිනෙදා වියදමට ඔබ සතු මුදල් යෙදවීමෙන් වලකින්න.
General Risk Warning: The financial products offered by the companies carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.
We are not an official website of Binary.com, ICmarkets, Tickmill, Pepperstone, Oymptrade or any third party website mentioned in the website.
This is the only Sinhala website that we operate as a Trading Educational Website. We do not operate any other sinhala trading educational website. අපගේ වෙනත් කිසිදු සිංහල ට්රේඩින් වෙබ් අඩවියක් නොමැත. අප සිංහල අධ්යාපනික වෙබ් අඩවියක් ලෙස මෙය පමණක් පවත්වාගෙන යන බව කරුණාවෙන් සලකන්න.
Countries not supported for Trading Instruments : Please refer relevant brokers websites for countries that are not supported for trading.
*EEA – European Economic Area Notice :
Binary and Digital options are prohibited in EEA*
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Please be advised that certain products and/or multiplier levels may not be available for traders from EEA* countries due to legal restrictions
* සැලකිය යුතුයි : ඔබ බයිනරි ඔප්ෂන් ට්රේඩින් / ෆොරෙක්ස් සදහා යොදවන මුදල දැඩි අවදානමක ලක්විය හැක. අවදානමක් ගත හැකි අයට පමණක් සුදුසු කරුණු පමණක් මෙහි අඩංගු වේ. මෙය මුදල් ආයෝජනය කිරීම සදහා ලබාදෙන උපදෙස් නොවේ. ප්රතිලාභ.com වෙබ් අඩවියේ අරමුණ ඔබට බයිනරි ඔප්ෂන් ට්රේඩින් / ෆොරෙක්ස් සහ වෙනත් අධ්යාපනික තොරතුරු ලබාදීම පමණි. බයිනරි ඔප්ෂන් ට්රේඩින් / ෆොරෙක්ස් හරහා සිදුකරණ ආයෝජන අධික ලාභ ලැබෙන සහ අධික අවදානමක් පවතින ආයෝජනයන්ය ( ඉවසීම සහ කැපවීම නොමැති අයට මෙවැනි ට්රේඩින් ක්රම සුදුසු නොවේ ). කිසි විටක ඔබේ එදිනෙදා වියදමට හෝ ණයට ගත්ත මුදල් මේ සදහා යෙදවීමෙන් වලකින්න. ඒවගේම ඔබගේ රටේ මුදල් නීති සහ රෙගුලාසි වලට අවනත වන්න. ඔබ සිදුකරණ ආයෝජන සදහා සම්පුර්ණ වගකීම ඔබ සතුය. මෙම වෙබ් අඩවිය, එහි ඇඩ්මින්වරුන් හෝ මෙහි සදහන් වෙනත් වෙබ් අඩවි කිසිම වගකීමක් භාර නොගනිණ බව කරුණාවෙන් සලකන්න.
* Non Disclaimer Notice : Your capital may be at risk. This material is not investment advice. The purpose of the prathilaba.com website is to provide information about binary options trading / Forex trading and other information for educational purpose only. Though Binary Options / Forex Trading & any kind of Investments are potential high revenue making investments, it can lead to unexpected high losses due to high risk involved in it. You should not invest money which is for your day to day expenses or money taken via a loan. DO NOT invest money that you cannot afford to loose. YOU SHOULD TAKE THE FULL RESPONSIBILITY when making above trading investments. Also please make sure that you abide to monetary rules and regulations of your country. The prathilaba.com, it’s promoted third party services websites, it’s content and/or it’s admin/s will not take any responsibility for your losses and actions. Our content is not for those countries where forex brokers are not supported. So if you are from any of those countries ( USA, Canada, European Union and any other country where forex brokers are not supported ), Please kindly avoid using any content on our website or brokers websites.
© 2023 Prathilaba.com