How to Use Support and Resistance for Swing Trading
The concept and understanding of in Simplest form
The Chart of XBTUSD contract interacting with an earlier Support and turning it to a resistance in the illustrated chart.
I will like you to note the 3 scenarios that can occur in this instance.
1.When price approaches the support the 1st time as a Support expect an intial bounce.
2.Depends on the condition and strength of the move which we will discuss on some other analysis then we can anticipate a break as we have seen in 2.
3. After such break we may not know where the market will stop to retrace or find some Responsive Buyers responding to cheap XBTUSD prices but using Fibs extension we have a 1.25% extension @ $8756,1.41% @ $8374 and the later held.
4.Prices meets responsive buyers back to the Support which has now turn to Resistance and this is a key place to combine confluences of to find an attractive trade and use a candle stick as an exit @ 5
5.In 6 XBTUSD breaks the Resistance and turn it to a support with a proven continuation which was never follow through and we see prices of XBTUSD breaks back below the support to turn it to resistance in 7
6.The break of that support now which has again turn to a Resistance which is exhibited in 7 encounters respective follow through to another Fibs target of about $6250 zone which will be our target for the next few days on the Shortside.
Following the above analysis, it is deduced that :
1.Support 1st touch after a considerable time can always initially leads to a bounce and use fibs retracement to find where those Responsive Buyers.
2.Support may break when the force of the preceeding is strong and where it is coming from
3.When Support breaks look for retracement to short that 1st retracement to make some profit which can be exited partially or wholly when a contrarian 4hour candle show up as in fig 4.
4.A new break of that Resistance can then lead to another uptrend or false breakout so know when to expect it.