Forex Swing Trading Strategy #7:(Support Turned Resistance And Resistance Turned Support Trading System)

Another form of support and resistance trading is called the Support Turned Resistance and Resistance Turned Support trading system.

How The Support Turned Resistance And Resistance Turned Support Trading System Works

Sometimes when price breaks a strong level of support, at some stage in the future, price rises back up to this support level that it broke previously only to be pushed back down from that previous support level.

What has happened is that the previous support level has now acted as resistance level.

The opposite is also true: a resistance level broken has the potential to act as a support level when price falls down to this resistance level it broke previously.

Indicators Required: none

Timeframes: Any

Currency Pairs: Any

Rules

Buy Rules:

1. Once Resistance Level is broken, wait until price starts to fall back down to the the resistance level it broke.
2. Different types of orders can be used to enter into a trade: for buy stop order wait until a candlestick touches the level and place your order 2-5 pips above the high of that candlestick. Buy limit orders can be placed 2-5 pips above the  resistance turned support line. Or you can buy immediately at market once price hits that level.
3. Place your stop loss 10-30 pips below the resistance turned support line if you use buy limit and market orders. For buy stop orders,  place 2-5 pips below the low of the candlestick that touches that line.
4. For take profit targets, look for previous significant swing high and place your profit targets within that.

Sell Rules:

1. Once Support Level is broken, wait until price starts to rise up to the the support  level it broke.
2. Different types of orders can be used to enter into a trade: for sell stop order, wait until a candlestick touches the level and place your order 2-5 pips below the low of that candlestick. Sell limit orders can be placed 2-5 pips below the  support turned resistance line. Or you can sell  immediately at market once price hits that level.
3. Place your stop loss 10-30 pips above the support turned resistance line if you use sell limit and market orders. For sell stop orders,  place 2-5 pips above the high of the candlestick that touches that line.
4. For take profit targets, look for previous significant swing lows and place your profit targets within that.