As a trader, I can not emphasize enough about the importance of support and resistance. Support and resistance is the most popular technical analysis tool in the world of trading. Furthermore, the concept of support and resistance are the basis of many advanced trading strategies too. In fact, many of the advanced trading strategies taught in this book including Harmonic Pattern and Elliott Wave are also partly based on the concept of support and resistance. If you do not have good understanding over the support and resistance, it is recommended staying away from the day trading. Many educational materials do mention about support and resistance but in brief. Different textbooks only discuss them in several different angles and it is difficult to find some unified language talking over the support and resistance. Many book will suggest that support and resistance consists of three or more points touching the same line. On the other hand, some book might mention that support and resistance are the respective levels that you should watch out for your trading. They are correct. However, comparing to its mega popularity, most of the textbook provide the very brief description only. As in the Fibonacci analysis, support resistance is another technique lacks with scientific relevance. In this book, we will use the concept of the Equilibrium Fractal-Wave to visualize the price action around the support and resistance. At the same time, the visualized price action can be further used to derive entry and exit for your trading. In addition, we will show you several important classes of support and resistance for your trading. To visualize the price action around the support and resistance, we use the Peak Trough Transformation with ZigZag indicator. We use the free Peak Trough Analysis tool from the website: www.algotrading-investment.com.
This article is the part taken from the draft version of the Book: Scientific Guide to Price Action and Pattern Trading (Wisdom of Trend, Cycle, and Fractal Wave). Full version of the book can be found from the link below:
You can also use Ace Supply Demand Zone Indicator in MetaTrader to accomplish your support resistance analysis. Ace Supply Demand Zone indicator is non repainting and non lagging indicator with a lot of powerful features built on. Especially, you can use it like the horizontal support and resistance for your trading as well as the direction prediction trading strategy.
Turning Point Probability and Trend Probability can be measured with Fractal Pattern Scanner at every price action in your chart. The turning point probability can improve the accuracy of trading with horizontal support and resistance. You can watch this YouTube video how you can turn the support resistance into the killer strategy with the turning point probability in Fractal Pattern Scanner.
Below is the landing page to Fractal Pattern Scanner in MetaTrader 4 and MetaTrader 5.