Forex levels are one of the strongest indicators in the foreign exchange market. Traders often play “off the beat” with strong supports and resistance. Let’s see which Forex levels are the most reliable and how to determine them.
Each trader who comes to the Forex currency market begins his acquaintance with the market with support and resistance. The success of an open transaction depends on the correct identification of the level. There are many forex strategies built on the principle of breaking down important technical levels or rebounding from them.
Meanwhile, not all of them are “the same taste” and mainly differ in their strength. The levels of support and resistance can be divided into 6 types, which we will arrange as their strength grows.
The air level of support or resistance got its name due to the fact that it is formed “out of the blue”. It is formed when the bodies or tails of at least four candles bounce off of the same price. It is very important that the air level is not pierced by at least one candle, because in this case it already ceases to be such.
ROUND AIR LEVEL
This level is the same as the previous one, only formed near round levels (1.0000, 1.2000, 1.7500, etc.)
Round support and resistance have their own strength, which increases due to the formation of an air level as well.
HISTORICAL SUPPORT AND RESISTANCE
These are the levels that can be easily found on higher timeframes by looking at the history of a currency pair. From time to time, the price beats them in one direction, because, as forex traders say, they “remember” it. Historical levels have sufficient power and information.
ROUND HISTORICAL LEVEL
The same historical level, which is located at around price, which enhances its effect.
MIRROR SUPPORT AND RESISTANCE
Mirror levels of support and resistance are formed when the price bounces from them, overcomes, and then bounces in the other direction – that is, these are the levels that turn from support into resistance and vice versa.
ROUND MIRROR LEVEL
The round mirror level is the previous level formed at the round price. It is the strongest forex level.
ADDITIONAL GRADATION OF FOREX LEVELS
In addition, floating and fixed levels can be distinguished. A floating level is a level that the price constantly “cuts”. Fixed – this is the level below or above which price trading occurs.
Also, when classifying and determining the strength of forex levels, it is imperative to take into account that their coincidence with levels built by another technique, for example, Fibonacci, adds “weight” to them.
A selection of Fibonacci level indicators at Fortrader.org
If your trading strategy uses support and resistance levels, consider the type of level and its strength – then the probability of its development will be very high, and you, of course, will get your profit.