In a layman’s language, support and resistance levels are specific predetermined price levels in trading where traders believe prices will stop and take an about-turn.
If you are part of our Olymp trade WhatsApp group, chances are, you are not so green on this topic.
We already discussed the basics of support and resistance when we were introducing the test candlestick strategy for making money in Olymp Trade.
If you are not part of our trading group already, follow the process below to register.
- Use this link to register for Olymp Trade.
- Get a free guidebook to aid you in trading (after registration in step 1).
- Lastly, use the WhatsApp button at the bottom of this page to request to join our group.
Back to our topic.
What are the support and resistance lines?
To even simplify our explanation further, let’s use an anecdote in our explanation.
Assuming you are a day trader in Olymp Trade.
You place your order very early in the morning instructing Olymp Trade that when prices hit this strike price (1.147727), it should execute your order.
Throughout the day you sit and wait, take frequent peeks in that chart, and notice that your trade isn’t live yet.
Prices have not risen high enough to match your predetermined action price (1.147727).
However, you can’t help but notice that several times and again, prices have gotten too close to (1.147727 – sometimes even hitting (1.147725) in two instances.
In this case, we call the price levels near (1.147727) a resistance point.
To ease things a bit, experienced traders will use the terms resistance and ceiling interchangeably to refer to this action point.
That’s precisely because these price levels at the ceiling prevent the market from moving prices upward.
See the image below. Our resistance line is that purple line with a strike price – 1.147727.
On the flip side, you will hear traders also saying, “I’ll set my support level at price – 1.503092.”
What they mean by support is prices on a chart that prevent an asset from spiking downwards.
The term support is also used interchangeably with the floor.
It is at this point that price correlation happens and hawk-eyed traders start buying more of assets in at this level to push prices back high again.
The image below shows support at 1.503092 and a price correction of up to 1.50962.
How to set up support and resistance levels in Olymp Trade.
To set up either a support/resistance level in your Olymp trade chart;
- Login to your Olymp Trade account.
- Click on the indicator button on the chart (if you are using a desktop browser) and the pencil button on top of your chart if you are using a mobile app.
- Scroll down to the bottom of your indicator list and pick horizontal lines (on desktop). Click on horizontal lines if you are using a mobile app.
- A pink dotted line will form on your chart – move your cursor to the level you want your support or resistance line to be and click once. Your line will automatically be formed.
If you used a mobile app to form the line, look for it at your current price then drag it to the sport you want it to be.
For mobile apps the horizontal line is orange.
You can set the first line as the support level and the second line as the resistance level.
Did you manage to do that?
Now to more important matters.
How to Pick Support and Resistance Signals in Olymp Trade.
To pick trading directions with this strategy, we must first agree on one thing.
There is a high probability that when prices enter support or resistance levels, they will bounce back/reverse in the opposite direction.
With that principle in mind, open an up trade if prices hit the floor/enter a support level.
And a down trade if prices hit a resistance level/the ceiling.
Not to get too excited too fast though, sometimes these prices break out of the set levels.
In which case your support level will become a resistance level and the resistance level will switch to become a support level.
See the example below: –
Now back to you. Create a Demo account in Olymp Trade to try this strategy.