Patience pays in trading. Stop chasing the markets and let price come to you. Pro Tip:
Mark out your SR areas in advance. Then look for trading opportunities when the price has come to your levels. If the price is elsewhere, stay out. How to tell when Support or Resistance will break — so you don't get "trapped"
The takeaway is this:
- Support tends to break in a downtrend
- Resistance tends to break in an uptrend
- Support and Resistance tend to break when there's buildup
Here's why… Resistance tends to break in an uptrend
Here's a fact:
For an uptrend to continue, it has to consistently break new highs. Thus, shorting at resistance is a low probability trade.
Instead, going long at Support is a better trade. Support tends to break in a downtrend
For a downtrend to continue, it has to consistently break new lows. Thus, going long at support isn't a good idea.
But, going short at Resistance is a great idea.
Next… Support and Resistance tend to break when there's buildup
Support is an area with potential buying pressure. So, the price should move up quickly, right?
Now… what if price didn't move up and instead, consolidates at Support?
What does it mean?
Recall the concept from Truth #1:
The more times Support or Resistance (SR) is tested, the weaker it becomes.
So it's a sign of weakness as the bulls couldn't push the price higher.
Perhaps there's no buying pressure or, there's strong selling pressure. Either way, it doesn't look good for the bulls and Support is likely to break.