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Support and Resistance (SNR) Trading

Discussion in 'Trading Strategies by SHIGERU (FX/TRADING MASTER)' started by SHIGERU, May 7, 2016.

  1. SHIGERU

    SHIGERU FX / TRADING MASTER Staff Member

    Difficulty Level: 3/10
    Time to read/learn: 10 minutes

    Hi my friends,

    Support and Resistance (SNR) is a very important feature in Forex markets, including other markets like commodities and shares.

    Support and Resistance areas are high activity buying and selling areas formed by traders/institutions worldwide where they are opening OR closing new trades. They are areas where market prices turn, pause or range.

    Support and Resistance Tips
    • Support and Resistance Areas DO NOT MEAN a Reversal of Trend. Many Traders like to immediately jump on a trade the moment price touches a Support or Resistance zone. (For example, sell when market hits a resistance zone, or buy when it touches a support zone.) Often when the markets punches through a zone and carries on without stopping, many novice traders are left wondering why their SNR zone wasn't 'respected'.

      To determine whether there is a buying or selling opportunity, you have to have 2 or more factors to help you!


    • Support and Resistance Areas MAY cause a reversal. However it may be a short term reversal or also known as Retracement. It does not guarantee a change in the overall trend on the bigger timeframe!
    Understanding SNR is important as it allows you to a) exit a trade, b) to enter a trade or c) do nothing. It helps you understand WHY price has stopped moving in a particular area.

    If you buy into an area which has a lot of resistance, you will find that the trade seems to go against you immediately. This is one of the major reasons why many traders fail, yet they do not understand WHY.

    A SNR Zone is used as a FACTOR in your trading. It is not an immediate signal for you to trade.

    However there is are simple basic fundamental rules you should always remember, and something which will aid you for your trading.

    REMEMBER THE 3 GOLDEN RULES OF SNR.

    RULE 1 - DO NOT BUY INTO RESISTANCE.
    RULE 2 - DO NOT SELL INTO SUPPORT.
    RULE 3 - Remember Rule 1 and 2!


    Before you start trading any Forex pair, stocks, gold etc.. you need to do the following steps.

    1. ZOOM OUT! Have a BIG PICTURE VIEW.

    Start FIRST with your DAILY CHART. Then 4-Hourly chart, and then 1-Hourly Charts. Identify Major Support and Resistance (SNR) Levels.

    A) Look for recent high and low points in your chart. Zoom out for a big picture view.

    SNR1.jpg

    B) Look where there is at least 3 or more candles in the same area.

    SNR2.jpg

    C) Use the rectangle tool to draw and mark the 1st candlestick body to the middle of the shadow/wick. Stretch the rectangle across your trading screen.

    SNR3.jpg
    2. Mark Major Support and Resistance Levels with a ZONE AREA.

    Many traders and teachers like to draw single lines to determine support and resistance. SNR is not a specific price on the chart. It's a RANGE, also known as a ZONE, or you can call it an area on the chart. Price is not specific when it comes to a SNR area.

    Here's a quick description and example of a RESISTANCE ZONE.

    SNR4.jpg

    Here's a quick description and example of a SUPPORT ZONE.

    SNR5.jpg

    (Show Explanation Video)

    (Graphic Explanation - 5 examples)

    Before i start trading, I will review major support and resistance levels on the weekly, Daily and 4-hourly charts.

    Any time-frame lower than these, can still work, but I find that through experience, these SNR levels on the bigger time-frames (daily timeframe, 4-hour timeframe) are much more consistent and reliable.

    Many traders in the world use these levels for reference to enter and exit their trades, and if you do not know where they are, you are trading BLIND.

    If you know where the major SNR levels are, you can easily make great trades, and know when to take your profit OR not to do ANYTHING!

    REMEMBER THE 3 GOLDEN RULES.

    RULE 1 - DO NOT BUY INTO RESISTANCE.
    RULE 2 - DO NOT SELL INTO SUPPORT.
    RULE 3 - Remember Rule 1 and 2!

    How to Trade using Support and Resistance Levels
    To determine if price has rejected a SNR Zone, we must look for price to LEAVE the zone.

    Look for candlestick on the 1-hour timeframe that opens and closes ABOVE or BELOW the SNR ZONE. This often indicates that price is likely to move in that direction (signs of rejection).

    The candle should not 'touch' and be clear of the zone that you've drawn.


    Selling from Resistance Example

    SNR-ResistanceRejection.jpg


    Buying from Support Example

    SNR-Support-Buying.jpg

    When Price breaks past a Support or Resistance Zone

    A) When Price breaks past a Resistance ZONE, the ZONE will turn into a SUPPORT zone.

    SNR-ResistanceToSupport.jpg

    B) When Price breaks below a SUPPORT Zone, the Zone will become a RESISTANCE zone.

    SNR-SupportToResistance.jpg

    To WIN - PLAN AHEAD!

    Creating a birds eye view of the market each trading week is very easy.

    Start by drawing DAILY SNR Zones. An example is what I've done for EUR/USD below.

    EUR/USD Daily Chart Major SNR Zones.

    EURUSD-daily.jpg

    After drawing your DAILY SNR Zones, you can start focusing on the smaller time frames (Like 4-Hourly or even 1-Hourly or smaller if you wish)

    EURUSD-4HOURLY.jpg


    Try and see this for yourself...

    See how we get into profitable trades with this strategy in our Members-Only Section. We show you where to put your Take-Profit (exit the trade), and Stop Loss (if we are wrong).

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    Last edited: Mar 26, 2017

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