You can draw support and resistance zones by looking at areas on your chart where price has bounced off. You then draw a horizontal line to connect these bounces, but there is more…
In this post I’ll reveal my tips and give you some rules for drawing your support and resistance lines or zones.
Let’s start with the order of importance. When I draw support and resistance lines I look for three things:
- Body bounces
- Wick bounces
- Ranges (congestion)
And also in this order. So body bounces are more important than wick bounces and wick bounces are more important than ranges or congestion. Which means that price is moving sideways.
In the example above, you can see that I’ve drawn the support zone on the body bounce in the first red box. Exactly below the bodies of those two candles on the left.
I find this bounce more important than the congestion / range and the wick bounces in the second red box. But they do align with each other as you can clearly see.
At the top with that resistance line, you see I’m doing a similar thing. And that brings me to the following …
Support and resistance does not have to be perfect
The reason most traders have difficulty drawing support and resistance, is that they complicate the process and want everything to be perfect.
They obsessively fiddle around with every line to place them precisely to the millimeter, but that’s just pointless. Just accept that you will never get them perfect. And you don’t have to.
If you and I would both mark the same chart with support and resistance lines, we will never draw exactly the same lines. And that’s okay, because you’ll always have to adjust your lines based on the most recent data.
Your stop loss must be difficult to hit and your take profit target must be easy to hit. Always place your stops BEHIND a barrier and your take profit orders IN FRONT of a barrier.
What would you rather do?
- Wasting hours to get your lines perfect?
- Or mark the zones and search for trades within a few minutes?
I would know! 😉
Tips for drawing support and resistance
In this section I’ll give you some practical pointers. Again, it doesn’t have to be perfect. You can always adjust your lines and eventually price will tell you whether you’re right or not.
- Zoom out for a better overview
- Start from the right and look left on your chart
- First find the most obvious body bounces
- Then look for wick bounces and ranges / congestion
- Start at the swing highs and lows and work towards the center
- Mark 2 to 3 zones above current price and 2 to 3 zones below
Bonus tip: Use the line chart
Some traders find it easier to mark support and resistance zones on a line chart. Perhaps that is also the case with you.
As with everything in life, you become better at something by practicing. And it’s no different with drawing support and resistance. Use your demo account to draw lines and zones. Spend half an hour every day on it and watch how price reacts to your zones.
Questions about these tips? Leave a comment!