How To Find Supports And Resistance

  1. Horizontal Support and Resistance: It generally includes those horizontal price level where the price either finds support or resistance(See the image for better )
  1. The greater the average interval the greater the support or resistance. Which means the 20 MA will be a weaker support/resistance as compared to 50 MA, Similarly the 200 MA will be stronger support/resistance than the 100 MA, So it will be difficult too break through it.
  2. If the SMA or EMA is above the price point it is considered as resistance and if it is below the trading price it is considered as support
  3. The greater the time interval, the greater the support or resistance. Which means if we have 100 MA in 4Hours time interval and 100 MA in 1 Day time interval as support the 100MA 1 day time interval will be we will a stronger support than 100 MA 4Hour time interval, and similar with the case of resistance.
  4. In shorter time intervals like 1min, 15min, 30 min I would not recommend using MAs that much patterns, horizontal support and resistance works magically well in these intervals, So I would recommend using them over MAs
  5. Always prefer larger MAs like 50,100,200 as supports in bear markets because of the high selling pressure.
  6. When you take a trade seeing these MAs always understand its a lagging indicator so it won’t tell you much about the current market conditions. Hence use them carefully with proper knowledge of current market conditions.
  7. Similar to Horizontal Support and Resistance level if a particular MA is getting tested again and again it will get weaker and weaker. Hence increasing the chances of it getting broken and increasing the risk of the trade.

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