Again much like the previous post on identifying the trend, this topic is basic but a must for this strategy. I'd say this is the second most important part of the strategy, after the trend.

Support & Resistance (S&R) levels are real, they aren't voodoo, and they're easily identifiable on any chart, index, timeframe, asset etc. They are live though, and if price strongly rejects one, it can "weaken" the S&R level, and vice versa if price spins on a dime at an S&R level, this further confirms the level. S&R levels can be made up from price, previous day's highs or lows, key levels after news announcements, opening range prices or trading session prices. Basically any key price level that screams out on a chart.

Basic Support & Resistance Levels

S&R prices/levels are "zones" and aren't exact to the pip or price. This strategy is a 5 minute timeframe strategy, so zooming out to the 1 hour timeframe, place key support & resistance lines. I find the easiest way to do this (without and indi) is to grab a highlighter app (highlight for mac) or similar for windows, and draw basic lines on the chart, connecting swing lows and swing highs. There will be key prices that repeat themselves, they are your key S&R!

Further reading from internet wizards:

Search for "support resistance" | YourTradingCoach
Support And Resistance Basics
http://www.dailyfx.com/forex/educati... in_Forex.html

Previous Day's High & Low (PDHL)

The PDHL is key in my eyes, I define the day as starting at the Sydney Open and going through to the end of New York, so the high and low that occurred throughout that time period. For me, these two prices were the be all and end all. I'm not sure whether the "big players", "huge banks" or giant pending orders were sitting at these prices, but I find that the following day, they're significant enough to provide strong resistance for price to break through, and if price is strong enough to break through, then it takes off!

The Two S/R Levels You Must Have On Your Charts

Opening Range

For me there are three opening ranges I take note of during the day; the Tokyo, Frankfurt & New York open. I define the opening range as the high and low of the first 5 minutes of the session. I see this as the arm wrestle at the start of the session. If price breaks above the opening range, there's a higher probability that the buyers won the wrestle, if price breaks below, the sellers won.

The opening range high and low act as support & resistance lines, price retests these lines and they've a good risk/reward location to enter from.

From the guru -> Search for "opening range" | YourTradingCoach

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