Top Support and Resistance Indicators
Support and Resistance indicators identify price points on the forex chart where the markets can potentially reverse. In this article, we take a look at the top support and resistance technical indicators.
What are support and resistance levels?
Support is the price level at which the prices stop falling, reverse, and start increasing. At this point, traders receive a signal to long the trade to profit from the rising markets. Resistance is the price level at which the prices stop rising, reverse and start decreasing. It gives the signal to short the trade to profit from the falling markets.
Top support and resistance indicators
Pivot Points are the price levels plotted on chart patterns that help determine the support and resistance levels for a particular trading day. The close price, high price, and low price of the last trading day are considered to calculate the Pivot Point levels for the current trading day. It can identify the reversal signal and allow you to place trading orders accordingly.
Fibonacci indicator can identify potential support and resistance levels along with taking profit targets that help traders place successful trading orders. The Fibonacci indicator consists of Fibonacci retracement levels, which are 23.6%, 38.2%, 50%, 61.8% and 78.6% which are drawn between two price levels and can be used to indicate support and resistance in the market.
- During a downtrend, the Fibonacci retracement levels can be placed from top to bottom, between the high price level (A) and the low price level (B). Point C in the Fibonacci retracement level indicates a bearish market reversal and acts as the resistance level. You can short your trades to profit from the falling market at this level.
- During an uptrend, the Fibonacci retracement levels can be placed from bottom to top between the low price level (A) and high price level (B). Point C in the Fibonacci retracement level indicates a bullish market reversal and acts as the support level. You can long your trades to profit from the rising market at this level.
Camarilla Pivots is an indicator that gives a trading range by defining the support and resistance price level during a particular market trend. It is an extension to the standard Pivot Points indicator that provides traders with four different resistance and support levels that can be used for short-term trading.
Calculating Camarilla pivots –
Resistance 1 = closing price + ((high price – low price) * 1.0833)
Resistance 2 = closing price + ((high price – low price) * 1.1666)
Resistance 3 = closing price + ((high price – low price)*1.2500)
Resistance 4 = closing price + ((high price – low price)*1.5000) Similarly, Support 3 = closing price – ((high price – low price)*1.2500)
Support 4 = closing price – ((high price – low price)*15000)
Pivot point = (closing price + high price + low price)/3 To trade, a trader can consider the third and fourth resistance and support levels, as these two levels indicate breakouts in the market. Hence, when the currency pair price crosses the third support level from below, it signals traders to buy the trade due to a bullish reversal expectation. When the currency pair prices move above the resistance level and then go below it again, it signals traders to sell the trade due to a bearish reversal expectation.
Murrey Math Lines
The Murrey Math Lines is an eight pivot point indicator wherein each line has a different price action meaning. This indicator divides the currency pair's price action into eight important yet different levels: 0,8, 1/8, 2/8, 3/8, 4/8, 5/8, 6/8, 7/8, 8/8.
- The 8.8 and 0.8 pivot lines are the most important as they give the most significant and appropriate levels of support and resistance.
- The 6/8 and 2/8 pivot points are reversal points that help traders place orders at the support and resistance level right before the market reverses.
- The 7/8 and 1/8 line is a weak resistance and support level and does not signal traders to place an order unless the prices remain above (or below) this level for some time, sending a potential bearish (or bullish) reversal signal.
- The 4/8 is the strongest support or resistance level. It signals traders to place successful sell orders when the price is below the line and buy orders when they are above the line.
- The 5/8 line is the top of the trading range in the forex market as the prices spend most of their time trading between the 3/8 and 5/8 lines. When the prices are above the 5/8 line, it signals traders to continue buying, and when it is below this line, traders are signalled to exit the market. The opposite takes place with the 3/8 line.
Place your trading orders according to the support and resistance levels today
Placing trades according to the support level or resistance level helps profit from the reversing market trends. Since the support and resistance are extreme price levels, identifying them well before time provides ideal opportunities for short or long successful trades. Start trading with Blueberry Market’s forex trading platform today to experience a seamless trade execution. Sign up for a live trading account or try a risk-free demo account.
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