How To Use Barriers To Produce Great Trades In The Forex Market
Learning how to identify areas where many barriers exist can be very profitable for traders. Many types of price barriers exist in the Currency trading market. It is common for currency pairs to change direction at these barriers. When traders learn the ways they can put them together, traders may make a plan of trading with better chances to make good trades. Some common barriers include support and resistance levels, psychological barriers, and Fibonacci levels. Barriers on trend lines and at pivot points can also strengthen our analysis. Now we will look at the different types of barriers common in the FX market.Support and Resistance LevelsResistance and support levels are huge turning points that the market has consistently respected in the past. When the market respects them more, then they become stronger Support is identified as the turning point where the buyers took control and the currency pair began to rise. Resistance is any part at which the market stopped rising and dropped down. Resistance and support levels on larger time charts are considered more significant than those on smaller time charts.Psychological Barriers Psychological barriers are seen as huge numbers. Any number ending in 50 or 00 is a great barrier. Any number with the last numbers of 000 is better. You will be amazed at how much a currency pair starts do die and changes direction within a few pips of a psychological barrier.Fibonacci LevelsFibonacci lines are used a lot to determine if a point has the potential to reverse. Begin with your larger time charts and make Fibonacci lines on big moves. Go and mark all smaller moves.
See where the Fibonacci lines, psychological barriers and support and resistance lines agree with one another.Trend LinesDraw trend lines to mark all major moves and then work your way down to smaller trends. Where they exist, mark your parallel trend lines also. To mark them, draw lines along the lowest points of an upward trend and along the tops of a downward trend.
Pivot PointsMost packages for charting include a calculator or a tool that makes your points where it can pivot. These are areas at which the currency pair is most likely going to turn. Most tools and calculators offer many numbers both below and above the present levels of the currencies you are following.Making lines to mark the different barriers that we regularly encounter in the FX market help us identify where a pair is likely to turn. Write down those levels where multiple barriers correspond. This increases the probability of making trades that will make us money. The more barriers that meet at a given number, the more significant that barrier is.To learn more information about these barriers and their use on your charts