7 Charting Tools for Spread Betting by Malcolm Pryor

Author:Malcolm Pryor
Language: eng
Format: epub
Publisher: Harriman House

How to use this tool

There are three main ways to use this tool:

trading strategies can be built just around buying support and selling resistance,

when entering a trend, support and resistance can be used to identify low risk entry points, and

when in a trade support and resistance levels can be used to assist with setting initial and trailing stops.

Each of these is illustrated in the charts below.

Example

We look in this section at how support and resistance can be used in various types of markets. In sideways markets we are potentially interested in both long and short trades, but our first example looks at buying support. In trending markets we can use support and resistance both to identify low risk entry points to the trend and to assist with stop placement. In principle we will be looking to take trades in line with the trend, so in an uptrend we will be looking to buy support and in a downtrend we will be looking to sell resistance, rather than the other way round. We look at both an uptrend and a downtrend to illustrate these points.

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