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Five cardinal rules to find the key support and resistance

The technical analysis depends on the support and resistance level trading system. No matter which trading strategy or approach you follow, you must learn to find the key support and resistance level. Some traders in Hong Kong often call the support zone the demand and resistance level the supply zone. But it doesn’t matter what they are called as long as you can find these key levels. But finding these key levels is not an easy task. It requires perfect understanding of the higher time frame data and other important variables. In this article, we will discuss five amazing techniques by which we can find the key support and resistance.

Use of daily and weekly time frame

The higher time frame data always reflects accurate price movement of the financial instrument. You will be able to find the key trading zones with precision. To find the support or resistance you need to connect two significant highs or lows of the market. If you see the highs and lows in the lower time frame, you are not dealing with significant points. Thus, you are not going to find the major trading zones. Most of the time, you will end up trading the minor support and resistance level. To solve this problem, you can use the daily and weekly time frames. Learn their proper use and you can have a career in the investment industry.

Learn to use the Japanese candlestick

Those who use a linear or area chart can’t find the key trading zone. Most of the time, you will end up with faulty support and resistance level and eventually blow up your trading account. Forex trading is a very sophisticated business and you must work hard to achieve perfection. Learn about the Japanese candlestick pattern and this will help you to find the key trading zone. The use of candlestick patterns also tells you about the strength of the buyers and sellers. Think smart and try to improve your trading edge by taking smart steps.

Stop using the indicators

Those who rely on the indicators reading to find the key support and resistance are making a big mistake. Indicators should be used as your trade filter tool. If you rely on those tools to find your suitable trading spot, you are not going to make any real progress. Does this mean we will not use any indicators in the Forex market? Well, you can use the indicators to assess the condition of the trade setup but it should never be used to determine the supply and demand. Try to use the manual trading method since it gives far better results.

Use the Fibonacci retracement tool

One of the best ways to find the potentials support and resistance level for trading is to use the Fibonacci retracement tool. It helps you to find the best trades based on the swing high and low. Though we have many retracement levels, the 50% and 61.8% retracement levels should be given top priority. When you use the Fibonacci retracement tool in trading, try to reduce the risk factors by following strict money management rules.

Learn from your mistakes

No strategy or trading method is perfect. Those who say they know the best way to find the supply and demand zone, you should stay away from them. At the initial stage, you have to open a demo account with Saxo and try different approaches to find these important trading levels. The new traders will face many difficulties but after learning the basic technical parameters, things will make sense. There is no reason to become frustrated in your learning stage. No one can lead their dream life in Hong Kong without having a proper education. Make mistakes but learn from the losing orders. Keep improving your trading system and you will become a successful trader.

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