If you are new to forex trading, you may be wondering what support and resistance indicator MT4 is all about then you have your wish granted in this post. Support and resistance are among the top buzzwords in the forex market. Traders use them to technically analyze the market – from large trading companies, big banks to small retail traders.
Support and resistance indicator MT4 are also used to determine the point where demand and supply meets. Having a sound knowledge of these terms can be the difference between making it big in the market and losing out from potential opportunities.
In this post, we will cover everything you need to know about support and resistance indicator MT4 so that you can get the most out of the market.
What are Support and Resistance?
Support: Can be defined on the MT4 chart as a level where demand is very strong to prevent the decline of the price. When there is a drop in the price of a security, buyers tend to more, while traders feel reluctant to sell; this is how a support line is formed.
Resistance: On the other hand, it helps to find exit points for you to trade on a long-term basis. Generally, resistance is strong enough to stop the price increasing. When the price moves towards resistance, buyers become reluctant to buy security, while sellers tend to sell more.
3 Ways To Identify Support and Resistance
This method is widely used by different categories of traders to find support and resistance levels. It occurs the moment prices end with multiple 0’s. Let’s take an example: if you have a price of 1.3360, you are likely to round it off to 1.3400 or 1.3300. Common psychology levels are those with double zeros at the end, like 127.00 or 2.2100. Prices with three 0’s (3.4000 or 340.00) are more powerful.
Swing Highs and Lows
Swing Highs and lows is the process of finding previous levels on the chart where the price couldn’t breakthrough. Using this method is highly time-consuming, as you have to mark every level on all currency pairs that you have traded.
Pivot points can also be used to determine support and resistance levels on the MT4 chart. This method uses the chart’s low, high, and close points to find potential support and resistance levels. For the most part, pivot points are the easiest method to use when determining support and resistance levels.
Ways Of Trading With Support and Resistance Indicator MT4
#1. Support and Resistance Bounce
The essence of trading support and resistance with this technique is to capture the price rebound. It tells you whether or not the price will break the resistance or support. Several traders have made the mistake of placing orders directly on the resistance and support levels. Instead of placing your orders immediately, wait a little bit for a bound before doing so.
If you want to trade on a short-term basis, allow some time for the price to bounce off the resistance levels before you trade.
#2. Support and Resistance Break
Support and resistance break can be traded in two ways – the hard way or the easy way.
The Easy Way
Trading the easy way means to wait a little for the price to pull back from the resistance and support level, then trade once the price bounces.
The Hard Way
Expert traders widely use this method. It is a situation where traders buy/sell a security when the price passes through the zone. If you trade directly on the resistance and support levels at their first occurrence, you may run at a loss. Hence, wait a little bit for the price to pass through the zone.
Using Indicators to Find Support and Resistance Levels Automatically
Finding support and resistance levels on the MT4 chart is not as easy as it sounds. It is tricky and time-consuming. Using an indicator becomes a no-brainer in this regard. An indicator will automatically find the best resistance and support levels for you to enter a trade.
Below, we have highlighted some indicators you can use to find support and resistance levels on MT4.
Barry is a great indicator widely used by many traders. It was designed and developed by the famous Barry Stander. If you apply Barry to your chart, it will take the highs and plot the resistance levels and also take the lows to plot the support levels.
However, it requires you to do some work still because it will not show you when the price moves from resistance to support and vice versa.
MQLTA uses an algorithm to determine the resistance and support levels on the MT4 chart. It scans a set of candles to find the point where the price has paused or bounced. After finding the point, it then calculates the median to find the resistance and support level on the chart accurately.
Features of MQLTA
- Sensitive Configuration: MQLTA shows as much support and resistance levels as you want
- Notifications: You can set MQLTA to send you a notification via phone or email.
How to Install Support and Resistance Indicator MT4
The following is a step by step guide on how to install support and resistance indicator MT4:
- Open the MT4 trading platform.
- On the MT4 platform, click on the “file” button and open the data folder.
- Once the folder opens on your screen, check for the folder named MQL4.
- Also, check for the folder titled “Indicators.”
- Copy and paste the indicator you need inside the indicator folder
- Close the indicator folder and the MT4 platform
- Open the MT4 platform, the indicator you selected should be ready to use.
Using Support and Resistance Indicator MT4
Follow these steps to use the indicator:
- Select your preferred pair
- Check the custom bar and click on the indicator folder
- Select the indicator and follow the instructions to configure the indicator
- Check “Allow all import” and click ok to proceed
- Support and resistance indicator MT4 should be displayed on the chart.
Final Thoughts: Support and Resistance Indicator MT4
Support and resistance indicator MT4 is a great tool to behold if you want to accurately analyze the forex market to determine when to enter or exit a position. Whether you are an expert or newbie trader, downloading and installing this indicator comes with several benefits.
If you are enthusiastic to succeed as a trader, then there are various other tools you could utilize for doing so. You can check it out on our Best Metatrader Indicators page and encourage yourself to generate higher profits from Forex!