Valutrades Basic Trading Course - Lesson 8: Support, Resistance and Trend Lines

Welcome to the Valutrades Basic Trading Course!

Free FX Trading Signals from Valutrades: www.valutrades.com/en/trading-signals

This is a series of videos, designed to launch the journey of beginning traders, in every aspect of trading with Valutrades.

In our eighth video, let’s take a look at Support, Resistance and Trend Lines.

Perhaps the most important indicator or graphic object that you will use while analysing the markets is the Horizontal Line.

Let’s start with a daily (D1) chart on your favourite symbol.

You can find the Horizontal Line on MT4, on the Line Studies toolbar, here.

Simply click on this and move your cursor to the highest point of price action, click, and drop it there.

To change the properties of the Horizontal Line, double-click on it and you will see small boxes on either end.

Right-click and select Horizontal Line Properties.

You may now change the colour and the thickness.

Now, create another Horizontal Line and find the lowest point of price action.

The upper line is what we call Resistance, the highest point that the market is willing in to Buy a symbol.

The lower line is what we call Support, the lowest point that the market is willing to Sell a symbol.

Now, start plotting more lines where you see other points of Support and Resistance.

You will note that sometimes, levels of Resistance were older levels of Support and vice-versa.

These are called Key Levels.

A good rule is to never Sell too close to a line of Support because price action could bounce and your position will be stopped out.

The same can be said of Buying too close to a line of Resistance.

Good traders will be patient and either wait for the bounce or wait for the break of Support or Resistance and close the position at the next level.

Now, change the time frame to four-hour (H4) and lower time frames, and you may plot more Horizontal Lines.

Even if you trade on lower time frames, you need to pay serious attention to Support and Resistance.

But what about trending markets?

A Trend Line can be accessed here in the same way.

Select it and click the cursor on the swing high or swing low of a trend.

Now drag the line, intersecting more highs and lows along the way, and release when you have finished the line.

You may modify the line by double-clicking and manipulating it on the small boxes.

Now, draw another line to create a channel.

We always want to trade in the direction of the trend and you will find that, when price action bounces off the trend line, you may have a good opportunity to open a position.

That’s all for now.

In the next lesson, we will be looking at how to use the Moving Average on MT4.

Happy trading with Valutrades and we will see you soon.

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