Auto Support and Resistance Indicator Guideline

Support and resistance indicator MT4 is one of the most used indicator in technical analysis. It specifies price levels on the price chart. The support and resistance MT5 indicator tends to act as barriers, preventing the price of a financial instrument from going in a certain direction. Using the support and resistance indicator for tradingview allows you to identify different support and resistance areas. Which helps you to make more accurate decisions.  In this course, we will try to explain this indicator in order to make it clear for traders, especially beginners.
Support and Resistance indicator for MT4 and MT5 cover

Support and Resistance Indicator guideline

What is support and resistance indicator?

Support and resistance indicator is a very effective tool that assists you in your daily trading. Indeed, it highlights the most important price areas. These areas represent the price moves with profitable opportunities. Therefore this MT4 indicator displays the different price changes by two colored rectangles. A red rectangle which represents the support area and the other is green which represents the resistance area. The support and resistance indicator automatically dectect support and resistance zones which make it easier for novist and even profetionals traders to trade them.

What are Support and Resistance levels ?

Support and Resistance are key levels at which an exchange flow between buyers and sellers may have shifted. Those levels reflect investors. On the one hand, support levels reflect bullish traders. But, on the other hand, resistance levels reflect a bearish one. The logic is to sell near the resistance levels in an uptrend and buy near the support levels in a downtrend on MetaTrader platforms.

  • Support level

A support level is a level of price that a financial instrument does not drop below in a certain period of time. This level is created when the demand starts growing as the price is falling. Support levels are located below the present price levels. The process is as follows: when the price drops toward the support level and becomes cheaper, buyers become more willing to buy and sellers become less willing to sell. However, if the price exceeds this level, it is probably will continue falling until it finds another support level. The support level is drawn by a line along the lowest lows for the considered period.

Support level explained for traders
  • Resistance level

A resistance level is a price level that an asset does not exceed above in a certain period of time. This level appears when the demand starts falling as the price is rising. Moreover, resistance levels are located above the present price levels. The logic here is so simple. When the price grows toward the resistance level and becomes costlier, sellers become more interested to sell and buyers become less interested to buy. However, if the price exceeds this level, it is probably will continue growing until it finds another resistance level. The resistance level is drawn by a line along the highest highs for the considered period.

Resistance level explained for forex traders

How do you identify strong and weak support and resistance?

Support and Resistance Indicator displays weak and strong zones.
  • Weak support and resistance levels don’t hold up. That is to say, they are easily penetrated. In contrast, strong levels hold and act as barriers to price appreciation/depreciation over time.
  • Strong support and resistance levels are price levels that have frequently induced trend reverses over time. To clarify, the higher the frequency of trend reversion the stronger are those levels.
In conclusion, when the price is trending to meet strong support or resistance levels, it will often bounce back off several times before breaking them.
  • Strong and Weak Support zones example

On the one hand, if the price was trending lower and then reversed into an uptrend several times at the same level, then the price level where the pullback occurred is a strong support area.

There is a major difference between Weak Support areas and Strong ones. The probability of breaking the Strong support by the price is very low. Because the strong levels are tested several times. Consequently, strong Support levels are perfect opportunities for trading on the MT4 platform.

Weak and strong support zones example
  • Weak and Strong resistance zones example

On the other hand, If the price was trending upside and then shifted toward a downtrend several times at the same level, then the price level where the trend reversion occurred is a strong resistance area.

There is a major difference between Weak Resistance levels and Strong ones. The probability of breaking the Strong Resistance by the price is very low. Because the strong areas are tested several times. As a result, strong Resistance levels are perfect chances for trading on the MT5 chart.

Weak and strong resistance zones

How to trade with support and resistance indicator ?

Trading using support and resistance indicator is not difficult. Traders usually use it to trade breakouts and pullbacks. However, the support and resistance levels work as bars in order to help traders end the pullbacks or breakouts. In fact, support and resistance put a limit for the price movements. Therefore, if the price exceeds these levels, this phenomenon is named “breakout”. When the breakout occurs outside the resistance area, this is a profitable opportunity for traders who desire to sell. Likewise, when the breakout happens outside the support area, this will be profitable for traders who wish to buy. Pullbacks typically occur when the price of the asset gets the possible high and low and retraces. Which leads to the change of the current direction. So support and resistance work to assist traders to know when there is a reverse or a continuation of the current direction. This will be good for traders to minimize their trading risk by preparing themselves in advance to change their position.
  • Example 1 : Trading with strong support zone

To trade with strong support zones you need to follow these instructions:

  • Buy Signal: When the price tests back the strong support levels several times, the probability that the price will increase is very high. Because these levels are tested multiple times by the price without succeeding to break them.
  • Sell Signal: When the price succeeds to break key Support levels in the Strong Support area, the probability that the price will fall down to lower levels is very high. As a result, the price will very probably continue to fall down.
Strong support zone trading examples
  • Example 2: Trading with strong support zone

To trade with strong resistance zones you need to follow these instructions:

  • Long Signal: When the price succeeds to break key resistance levels in a strong Resistance zone, the probability that the price will increase is very high. Because these areas are tested multiple times by the price before succeeding to break them.
  • Short Signal: When the price tests back the strong resistance levels several times, the probability that the price will decrease is very high. Because these levels are tested multiple times by the price without succeeding to break them. As a result, the price will very probably fall down.
Strong resistance zone trading examples

Download Support and resistance indicator for MT4

Support and resistance indicator for MT4 is the best MetaTrader 4 indicator for determining support and resistance areas. These areas represent the top and bottom of the price chart. And illustrate the highs and lows of a security. Trading with this indicator can assist traders to choose the right path for trading. However, using the support and resistance MT4 indicator makes you gain time and energy since you don’t need to draw these zones manually. Therefore, it plots the support & resistance automatically by just joining it to your chart.

Support and resistance for MT4 trading example

Download Support and resistance indicator for MT5

Support and resistance indicator MT5 is a simple and effective technical tool on MetaTrader 5 platform. It works at any timeframe. This MT5 indicator works to check the support and resistance areas. However, it displays red and green lines (or rectangles). The line located above the current price level and has a green color (or blue) is called the resistance level. And the line is located below the current price level and has a red color level called the resistance level.

Support and resistance indicator for MT5 trading example

Download Support and resistance indicator for Tradingview

Support and resistance indicator Tradingview is a build in indicator in Tradingview platform. However traders can use it to build different trading strategies such as scalping, swing, day and intraday trading. This Tradingview indicator is very good for newbie traders still trying to understand how to plot these zones. It can be also helpful for advanced traders which allow them to gain more time. However, with the high volatility in the market, it is important to employ an indicator like this. This profitable tool can allow you to makewealth in the market.

Support and resistance indicator Tradingview example

Conclusion

Support and resistance indicator is a free download technical indicator. It makes the technical analysis more suitable for traders. Moreovers this MT5 indicator assists you to save time as it plots potential support and resistance levels once you attach it to your chart. The support and resistance indicator like any other indicator, you have to use with another technical tool for more accurate signals.