In today forex faq, we have a good question from one of our fellow readers asking me how to tell whether the market will break through a S&R level or get repelled by it.
Below is the question:
Thank you for your blogging and information.
Could you please explain how to tell which direction the price will go when it hits a strong s/r level? Sometimes it bounces off and sometimes it breaks through – how does one predict the difference?
If you have been reading forex websites or forex books, you will realize that they tend to emphasize the importance of S&R and they often ask you to trade based on the repulsion of the S&R
So what are the important S&R levels?
- Pivot Levels
- 0.382, 0.500 and 0.618 Fibonacci Retracement Levels
- Levels with more than 3 swings lows or swing highs
- 200 EMA
That is why I have the Multiple Fibonacci Techniques, M Pivots Techniques and Confluence of Support and Resistance Strategy modules in my Forex Street University Course. This is because after years of trading, I realize that the price only respect levels with confluence of support and resistance.
This means that they will usually get repelled by these levels and we are going to make a profits from the repulsion.
So What is Confluence of Support & Resistance?
It is the level where the above mention Support and Resistance levels get aligned. For example, I manage to find a level where the pivot and Fibonacci levels aligned together. In this way, I have a level which is supported by 2 major Supports.
Do you think that the price will break through that level or get repelled by it?
However the best confluence will be levels where you manage to find several overlapping of Fibonacci plus pivots and I can’t tell you too much about this as this is only taught in the Multiple Fibonacci modules and Confluence of Support module in my Forex Street University course.
Therefore if you are interested in trading the repulsion of the price, you must know exactly how to find those levels where several major support and resistance gets aligned. Without this knowledge, you will realize that you have more losing trades than winning trades.
Knowing how to identify levels where several S&R aligned is very important for a trader and that is why I place the Multiple Fibonacci, M Pivot and Confluence of Support and Resistance at the 3rd, 4th and 5th module of the course.
I hope that I have answered your question and do feel free to email me again if you have any problem.