Mastering Support & Resistance: The 95% Mistake

Summary

Unlock the true power of support and resistance in trading, a concept most traders misunderstand. Instead of just drawing lines, learn to view these as price areas, using rectangles on your charts for accuracy. Support and resistance alone aren't a trading edge; they must complement other strategies. Key applications include identifying potential price targets, understanding minor support or resistance when previous resistance turns into support in an uptrend, or vice-versa in a downtrend. Also, recognize how consolidation at prior resistance can signal strength for a breakout, or consolidation at support can signal weakness for a breakdown. When a breakout or breakdown fails, it's a critical signal to exit or trail your stop. Real-world examples, like a DXF trade generating over $2,600, demonstrate using prior resistance as new support after a breakout, and a MRNO trade for over $2,300, utilizing prior resistance as a first target. Conversely, an HLIT trade was avoided due to strong daily resistance above the entry, and a KDK trade profited from a gap down into macro support on the weekly chart, with resistance acting as the first target.