We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Bitcoin
Bullish
More View more
Real Time News
  • The #Dow Jones and #Nasdaq 100 will await key earnings from some of the world’s largest manufacturers and tech companies while the #DAX grapples with freshly-imposed tariffs. Get your equities market update from @PeterHanksFX Here: https://t.co/u2lG19JFt3 https://t.co/OHs4rQEH7T
  • Crude #oil prices are consolidating above a key support zone we’ve been tracking for more-than three months now. Get your market update from @MBForex here: https://t.co/XaACvEpLG4 #OOTT https://t.co/XjmjUt4Par
  • Why trade with Bollinger Bands®? Find out as a day trader, how you can use it to your advantage:https://t.co/dwODDDSsFi @WVenketas https://t.co/SYduJ5k9mL
  • As the global economy continues to contract, the risk of geopolitical threats undermining financial and economic stability are rising, leaving the door open to violent volatility. Get your market update from @ZabelinDimitri here:https://t.co/2HEzqPobvA https://t.co/k13SwJmbRm
  • RT @IGSquawk: We're currently pricing #GBPUSD at 1.2852 and #FTSE at 7129.2 That's a drop of 1.18% from Fridays close for GBPUSD and 0.22%…
  • #DidYouKnow a #Doji candlestick signals market indecision and the potential for a change in direction. What are the top five types of Doji candlesticks? Find out: https://t.co/c51s3IBcEu https://t.co/K6W9X4v8XD
  • The $NZD may be carving out a near-term bottom against its US counterpart but scope for gains seems limited within a broader downtrend. Get your technical analysis from @IlyaSpivak here: https://t.co/7bsVuSyWMn https://t.co/DsmNYKk8v3
  • Can you trade with the joy of missing out (#JOMO)? Find out how you can turn your #FOMOintrading to JOMO here: https://t.co/G5H26NXZQe https://t.co/pVdKUPzvmk
  • RT @PaulBrandITV: It’s likely that this will end up in court on Monday. The case in the Scottish courts may well consider that this doesn’t…
  • RT @PaulBrandITV: BREAKING: Tonight the PM has sent this letter to EU requesting an extension to Brexit. Wording is copied and pasted from…
3 Easy Steps to Trade Forex

3 Easy Steps to Trade Forex

2011-11-07 20:19:00
James Stanley, Currency Strategist
Share:

3 Easy Steps to Trade Forex (Part 2)

By James Stanley

After a trader has learned to identify trend (which we looked at in our previous article available HERE), the next focus that they will generally want to emphasize is in regards to Support and Resistance. Support is a price or a ‘price zone,’ in which buyers have shown, or may show an interest in buying. Resistance is the opposite; a price at which investors have shown, or may show a willingness to sell.

3_easy_steps_part_deux_body_x0000_i1026.png, 3 Easy Steps to Trade Forex

Created with Marketscope/Trading Station 2.0

As you can see in the above picture, when price approached or entered in the ‘Support Zone,’ price had shown a tendency to go up. By price going up, we can assume that there were more buyers than sellers in the market.

Also, as price enters or approaches the Resistance Zone, traders have shown a tendency to sell in the past.

Identifying Support and Resistance in this fashion can be classified as using Price Action to display these levels; as traders are using the price chart itself, devoid of any other indicators or studies to assist.

Support and Resistance can be extremely important for traders to identify as taking a BUY position when price is approaching or in a resistance zone could be potentially costly.

Or, perhaps, imagine taking a SELL position as price is in a Support Zone. If traders respect that support as they had in the past, and ensue with more buying than selling – driving price higher, once again that could be potentially costly.

There are numerous ways of identifying Support and Resistance, or potential Support and Resistance price zones. This is where areas of study such as Fibonacci can come into play, as many traders will look at ‘Fibonacci levels,’ to point out potential prices that may become Support or Resistance in the future. The links below offer more information in specific regards to Fibonacci.

3_easy_steps_part_deux_body_Picture_4.png, 3 Easy Steps to Trade Forex

Created with Marketscope/Trading Station 2.0

Pivot points are another study that traders will commonly look to in an effort of forecasting potential price levels that may function as support or resistance in the future. Pivot points are based on calculations of previous day’s price action. Once again, the links below contain more in-depth information into the study.

If you would like more information Support/Resistance:

Fibonacci Retracements: How to Trade Fibs in Forex

Pivot Points: Floor Trader Pivots

DailyFX PLUS Online Video Course Lesson 1- Support and Resistance

How to Trade with Support and Resistance Part 1

How to Trade with Support and Resistance Part 2

Price Action Swings

--- Written by James Stanley

To contact James Stanley, please email Instructor@DailyFX.Com. You can follow James on Twitter @JStanleyFX.

To join James Stanley’s distribution list, please click here.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.