Support Resistance - Method 1: Use swing high / swing low

First, important support is the swing highs and swing lows CLOSE.

Swing highs and swing lows are the market's reversal points where a sudden increase in buying and selling volume causes the market to reverse. So if prices return to those areas, the possibility of another reversal will be high.

For example:


The price returned to the top and reversed, continued to return to the bottom, and reversed. Note that the more important swing high and swing low are, the higher the probability of reversal, and the closer the swing high/low is to the current, the higher the value.


How to trade with swing high/swing low:

When the price approaches a swing high - resistance, we wait for the price to form one of the following 3 patterns to sell down:
  • Pin bar discount
  • Dark cloud cover
  • Bearish engulfing
These are patterns in which there is a break-up and then the price reverses and falls sharply, creating a false break, with a very high possibility of reversal.

Example:


The price approached the swing high earlier, forming a bearish pin bar with the tail breaking above the resistance. Sell as soon as the pin bar is closed. Note that the entry setup must have a trailing candlestick above resistance (for a bearish engulf candle there is the first bullish candlestick to rise above resistance).

Supporting Resistance - Method 2: Exponential Moving Average (ema)

The second support zone of equal importance is the exponential moving average - ema. It is a dynamic resistance support. In good trends, the price really respects the ema lines.


Note that the price is very respectful of the 2 ema lines, especially the 50 ema (below), indicating that this is a "learned" trend.

But there will be many times when the price will cross these two lines, as follows:


These are the times when the market turns to an accumulation and unpredictable (choppy) phase, really when seeing this signal, we should not trade, because there will be no meaningful waves.

How to trade with ema sugar:

First, wait for ema 20 to cut ema 50. Then wait for the price to adjust down 1 of the 2 ema lines. Wait for the price to form one of the following patterns to enter an order:
  • Pin bar price increases
  • Candle piercing price increases
  • The bullish engulfing candle
For example:

2 ema lines create an increased intersection, confirm increasing momentum. Wait for the price to correct to the 50 ema (or the intersection between the two ema lines), the bullish engulfing candle is formed (circled in red), and the entry buys.

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