How well do you know how to utilise support and resistance for trading?
This post was originally posted here. The writer, Rayner is a veteran community member and blogger on InvestingNote, with a username known as @Rayner and has 605 followers.
Here’s a quick quiz for you about Support and Resistance…
The more times support and resistance is tested (within a short period of time), the stronger it becomes. (True / False)
You should set your stop loss below support and above resistance so you don’t get stopped out easily. (True / False)
You want to buy near support because it offers a favorable risk to reward on your trade. (True / False)
Do you want to know the answers to these questions?
Then read on…
If you read most trading textbooks, they’ll tell you that the more times support and resistance are tested, the stronger they become.