Many people find that one of the most productive ways to trade currencies is to focus on entering positions around key support and resistance levels. This is because the markets are greatly influenced by these specific levels.
These pivot points can easily be added to your normal price charts in most cases. After doing so you will instantly see the various different support and resistance levels. This includes the central pivot point, as well as two (or three) support and resistance levels.
You can also calculate your own key support and resistance levels if you really want to, which is what a few forex professionals at Options University have done in the new Forex Mastery course. However for most people the conventional pivot points will suffice because these are used by many other traders all around the world.
You can trade these crucial levels by observing the price movements when it gets close to each of these levels. For instance if the price strengthens and trades close to the first resistance level, and then hovers around this level for a few hours, then it may be worth taking out a short position if the price suddenly moves strongly downwards because you have already seen that it failed to break through this resistance level.
You can also use these support and resistance levels to determine where you are going to exit your current positions because the price will very often go on to test them before bouncing back again.
So overall there are many ways you can profit from support and resistance levels when adopting a short-term trading strategy.
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