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Support and Resistance
Support and resistance are two of the most discussed aspects of technical analysis. Traders are always trying to find price levels that may act as barriers to the market. When the market is in a downtrend, support levels act as areas of possible reversals of the trend. This goes vice versa for when the market is in an uptrend. There are countless indicators that can help identify areas of support and resistance. Highs/lows, moving averages, trend lines, VWAP, Pivot levels, and Fibonacci retracements are just a few examples of indicators that can be used to find support and resistance levels. Below is a screenshot showing several of these price levels and how the market reacted off them.
The screenshot above is from our Key Levels Confluence indicator for NinjaTrader. If you are interested in learning more about our support and resistance products, you can find additional information on the indicators page!
There are several ways to trade support and resistance levels. One way is to take trades off of reversal price levels. For example, if the market is in an uptrend, we could place an order to go short at the next level of resistance. Likewise, if the market is in a downtrend, we can place a buy order at the next level of support. Another way to trade support and resistance levels is to take trades after the break of a key level. For example, if we believe a market uptrend will continue if price breaks a key level of resistance, we can take a long trade once this level breaks.
Our Basic Chart Trader Tools product allows traders to easily attach orders to levels of support and resistance. This product also provides the ability to offset these levels based on number of ticks, allowing traders to play levels more aggressively or more conservatively. You can check out our Enhanced Chart Trader products to simplify your support and resistance trading in NinjaTrader.