Intraday forex support and resistance levels
Another way to use moving averages is to use them as dynamic support and resistance levels. They are constantly changing depending on recent price action. There are many forex traders out there who look at these moving averages as key support or resistance.
These traders will buy when price dips and tests the moving average or sell if price rises and touches the moving average. It looks like it held really well!
Every time price approached 50 EMA and tested it, it acted as resistance and price bounced back down. One thing you should keep in mind is that these are just like your normal support and resistance lines. Sometimes it will go past it a little bit before heading back in the direction of the trend. There are also times when intraday forex support and resistance levels will blast past it altogether.
What some forex traders do is that they pop on two moving averages, and only buy or sell once price is in the middle of the space between the two moving averages.
From the chart above, you see that price went slightly past the 10 EMA a few pips, but proceeded to drop afterwards. There are some traders who use intraday strategies just like this.
The idea is that just like your horizontal support and resistance areas, these moving averages should be treated like zones or areas of interest. 1 binary options signals with 80 win rate broker you know that moving averages can potentially act as support and resistance.
Combining a couple of them, you can have yourself a nice little zone. You know that the line most likely represent a moving area of interest.
3 Simple Ways to Identify Support and Resistance in Forex
The only problem of course is figuring out which moving average to use! We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders.
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