One of the most basic things about trading is support and resistance.  Yet many do not fully understand how to find what is a “good” or “true” support or resist level.  I will attempt to clear this up once and for all.  The chart above is a current daily chart of the Eur/USD on it you can see a red line that i drew to indicate where the strongest level of support is.  So how was able to find that?  Simply by finding what the last most significant resistance level is.  And that is the “secret”  Real support was formally a resistance level and real resistance was formally a support level.  This works in all markets and timeframes but is most relevant on the Daily time frame.  The only exception is if it is making an all time new high or low.  So if you want to find support look for resistance and if you want to find resistance look for support.  Feel free to email me directly at derekf@forextradersdaily.com if you have questions.   

Right now this pair is just below 1.5900 and it is Friday afternoon.  If it closes below the blue trend line then I am shorting this pair down to the green trend line. 

Can I get in earlier?  Sure.  Why not?  Just go down to a lower time frame and draw another line.

If the pair closes below the red trend line…that is an earlier entry.  The trade might trigger because if the pair goes sideways because the red trend line is so steep.

Stop loss is above the highs at 1.5956.  Profit target is at the green trend line which is currently at 1.5727.

I think that if it goes that far it can go even lower….we will see.

-Dave

I am with the Amish on this one.  This pair closed below the blue trend line and is headed south…ever so slowly.

I have a final profit target at .7865.  Stop loss at above .7953.

-Dave

The USD/CAD short trade is still going, and going.  This pair has treated me pretty poorly over the months and years, and I keep going back to it anyway, thinking, "This time is different."  Well, maybe this time is different, and we’ll see this pair finish what it started.

My stop is now just above 1.0220, and the profit target is way down at .9870 (the greenline). 

The GBP/USD short term trade is open; the red SteepLine is broken, and the pair is making its way down to the blue trendline — you can’t even see the greenline on this chart, but we’ll get back to showing that level if the pair can make its way down.

My stop loss is up at 1.9975.  Here’s the chart:

Wombats are angry! 

It is Friday afternoon and this is close to the 9600 area.  Even so, a good close below that area would trigger sell trade. Stop loss above .9635.  Target is the green line or .9555 or so.

-Dave

Today was good for short term trading.  The EUR/USD 5 minute trade that we set up a little while ago worked out nicely.  To see the original trade idea, close your ideas and imagine a field full of beautiful flowers, or just click here.

Here is the result: the pair did close above our trendline, and did rise to our purple resistance line of happiness.

I could not help myself.  I added another trendline — a red one (the steepest kind we draw) to the setup.  Now on the GBP/USD we can trade a close below the red trendline down to the blue.  There are a lot of people talking about how the pair is overextended, including James Chen, my fellow blogger here  at FXStreet.

Here’s the new trendline:

Here’s another way of looking at the GBP/USD.  There are so many ways to look at support and resistance; this happens to be another double-trendline setup that I like very much.

Oh, and a manure thief really did fall into dung.  Not making that up.

Here is the 4 HR chart to start us off, so that we can see the green (base) trendline.

And here’s the 1 HR setup that we can use for the trade.  I am waiting for a close below the blue trendline, as usual.

Dave is getting ready for chart school, so he’s busy right now.  He wanted me to pass on this chart for your enjoyment.  He is waiting for the EUR/JPY to close above the red trendline.  Where it goes from there?  He said he’ll update you later, if it breaks.  But at least he’s going for 169.00.