News & Analysis at your fingertips.

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. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
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
Wall Street
Bearish
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
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • good morning, happy Fed day and it's a big one for Powell. Fed looking to thread the needle bw acknowledging above forecast inflation while also not getting too jumpy on policy parameters. $USD hanging around resistance ~90.67 https://t.co/RBqrxSoQb7 https://t.co/0nNfWmQB6X
  • Forex Update: As of 12:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.42% 🇦🇺AUD: 0.33% 🇬🇧GBP: 0.30% 🇨🇦CAD: 0.09% 🇪🇺EUR: -0.02% 🇨🇭CHF: -0.04% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/PuVGKbAJvW
  • Heads Up:🇺🇸 Building Permits MoM (MAY) due at 12:30 GMT (15min) Previous: -1.3% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇺🇸 Housing Starts MoM (MAY) due at 12:30 GMT (15min) Previous: -9.5% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇨🇦 Inflation Rate MoM (MAY) due at 12:30 GMT (15min) Expected: 0.4% Previous: 0.5% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇨🇦 Inflation Rate YoY (MAY) due at 12:30 GMT (15min) Expected: 3.5% Previous: 3.4% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Heads Up:🇨🇦 Core Inflation Rate YoY (MAY) due at 12:30 GMT (15min) Expected: 2.4% Previous: 2.3% https://www.dailyfx.com/economic-calendar#2021-06-16
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/iNRhvCpBWM
  • ECB's Makhlouf says it is too early to discuss the end of PEPP
  • Ever wonder if there are other chart types that can be sued for technical analysis? HLOC charts are discussed in the following article as well as their pros and cons. Learn more here: https://t.co/qV3c7a4YR3 https://t.co/9TD1uIcaGT
The Definitive Guide to Scalping, Part4: Support & Resistance

The Definitive Guide to Scalping, Part4: Support & Resistance

Walker England, Forex Trading Instructor

Talking Points

  • Support and resistance levels are critical areas for scalpers to identify.
  • Price action, pivots, and moving averages can all be used to find these values.
  • Once identified, traders can then look to employ the strategy of their choosing.

One of the most important concepts a scalper needs to master is how to find levels of support and resistance. These levels will act as price ceilings and floors which will ultimately help us determine our scalping strategy.

While there are many ways to identify support and resistance, today we are going to take a look at three of the most common methods that can be applied in our day trading.

Learn Forex – EUR/USD and Price Action

The Definitive Guide to Scalping, Part4: Support & Resistance

(Chart Prepared by Walker England)

Price Action

The first way of finding support and resistance is by using price action. Scalpers should become comfortable with finding swing highs and swing lows on their charts as they are natural areas of support and resistance. A swing high is identified as a peak on the graph and a swing low can be pinpointed as a valley. These extremes in price can help us prepare for either a swing or breakout trading opportunity depending on what the graph is displaying.

Above we can see today’s price action on a EUR/USD 5minute chart. A price channel has been drawn by connecting a series of swing highs and swing lows. The swing highs help denote resistance and areas where scalpers may look for opportunities to sell. By connecting the swing lows, we have created an area of support where traders may wish to close existing sell positions, and potentially look for opportunities to buy.

Learn Forex – EUR/GBP with Cam Pivots

The Definitive Guide to Scalping, Part4: Support & Resistance

(Chart Prepared by Walker England)

Pivot Points

Pivot points also make great areas of support and resistance. These lines are drawn using a preset formula and are often favored by scalpers because they can be added to virtually any chart. Above is a great example of support in action on a EUR/GBP 30 minute chart using Camarilla Pivot Points. Once added, you can clearly see levels of support denoted by an “S” whereas lines of resistance are marked by an “R”. It should be noted that there are a variety of pivot points to choose from. Regardless of the pivots you use, their key purpose is to find these support and resistance levels for you. With that in mind, let’s look at an example.

Looking at today’s price movement on the EUR/GBP, we can clearly see price remained supported at the S3 camarilla pivot point. Traders looking to purchase the pair can wait for price to bounce off this value before looking to buy towards higher highs. It should be noted that resistance lines can also be used to find areas to sell as long as price remains in the trading range. In the event that price breaks the final levels of support or resistance, this would be identified as a market breakout. Knowing this, scalpers can adapt their pivot trading strategy to any market environment.

Learn Forex – AUDUSD with 200MVA

The Definitive Guide to Scalping, Part4: Support & Resistance

(Chart Prepared by Walker England)

Moving Averages

Last we will take a look at using simple moving averages (MVA) as a level of support and resistance. Most traders may be familiar with this average on longer period graphs, but is just as effective on shorter time frames such as the 30 minute and 5 minute charts. If price is above the average, traders can wait for dips and look to buy a currency pair. Conversely if price breaks below this value, the 200 moving average will change from an area of support to new resistance. Traders can then look for selling opportunities as long as price remains under the indicator.

Above we have a 200 period MVA displayed on an AUD/USD 5 minute chart. For the majority of trading on January 27th price stayed above the displayed 200 MVA. Traders could have used this as an opportunity to buy retracements or look to trade breaks towards higher highs on the AUD/USD. This morning however, support was broken with price moving through the 200 MVA. At this point, traders should consider the average as resistance while potentially changing their trading bias.

This concludes the 4th installment of The Definitive Guide to Scalping. If you missed one of the previous installments, don’t worry! You can catch up on all the action with the previous articles linked below.

The Definitive Guide to Scalping, Part 1: Market Conditions

The Definitive Guide to Scalping, Part2: Currency Pairs

The Definitive Guide to Scalping, Part 3: Time Frames

The Definitive Guide to Scalping, Part4: Support & Resistance

The Definitive Guide to Scalping, Part5: Scalping Ranges

The Definitive Guide to Scalping, Part6: Scalping Retracements

The Definitive Guide to Scalping, Part7: Scalping Breakouts

The Definitive Guide to Scalping, Part8: Risk Management

---Written by Walker England, Trading Instructor

To contact Walker, email instructor@dailyfx.com. Follow me on Twitter at @WEnglandFX.

To be added to Walker’s e-mail distribution list, CLICK HERE and enter in your email information.

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

DISCLOSURES