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Trading around support/resistance levels

Large market players usually place orders around strong levels of support and resistance for various reasons. Above levels of support usually are clustered buy orders, while below resistance levels – sell orders. The purpose of this strategy is to use the presence of these orders and join the flow that is formed when they are activated.

The set up:

  • identify the strong support and resistance levels, around which you can expect larger bids and offers
  • wait for a strong move towards the support/resistance level
  • buy at support, sell at resistance with a stop beyond the level.

You can trade this strategy via spot position or binary options (up/down). If you trade the spot market the following types of entries could be used:

  • Buy the support/Sell the resistance when the price first touches the level.
  • Buy/Sell at the second or third attempt (double or triple top on a tick or 1-minute chart)
  • Wait for a break (2B) and buy/sell when the price goes back up/down.

Test of resistnace traded via binary option