Online Trading Strategy According To The Levels Of Support And Resistance

One of the main things of technical analysis in Singapore Forex trading are the levels of support and resistance. Every time the rate breaks a level of support or resistance, it is usually changing to another state and makes new levels of support or resistance according to its positions. Usually the changes are reversal – the support level becomes resistance and resistance turns to a support level.

The price of the market depends on the support and resistance levels. Once it breaks one of these levels and doesn’t return right away so it is a good signal for any Singapore FX trader for a potentially successful trade. Nevertheless, breaking of one of the levels is not enough in order to assure you a high chance for a successful trade. It also depends on the quality analysis of the breakthrough of the support and/or resistance levels.

Currency market has a spontaneous character and sometimes it is very chaotic. Its volatility is often called as “market noise” and causes a lot of unpredictable movements. Making some researchers among the technical analysis books we can often find the images of a strong trend appearing after breaking one of the support or resistance levels. Such illustrations give a false impression to any newbie trader that Forex trading is so simple and making profit trading Forex is so easy. But in practice Forex market is not as easy as it looks from the first glance. In order to see how it works, you can analyze the past prices of one of the currency pairs in the candlestick chart. There you will find many support and resistance levels in the past periods and will be able to observe their breaking and trend appearance. As you will find out, in practice things are much more complicated and confusing. Here the problem is not only in the market noise mentioned above, it is a complex of different factors that can confuse any Forex trader – market’s spontanios movements, volatility, traders emotions and many others.

In order to make correct trading decisions and assure yourself a chance for successful trade, you have to create a certain criteria and rules that you will apply to the markets’ analysis before starting a trade. These rules will help you define true and potentially good situations from false and irrelevant ones and improve your chances for profit.

According to their own experience many Singapore Forex traders look for the levels of 3-5% for short-term trends and 10% for long-term trends. However, this method is very simple and doesn’t show the real situation at the moment of the breakthrough price movements. Sometimes it is very difficult to decide for what trend these 10% or 5% must be counted.