| Dec 18, 2013 11:01AM ET
I'm currently in a GBP trade that is in my favor I'd like to take a closer look at why this trade illustrates how simple support/resistance analysis can be an incredibly powerful tool for forecasting price. I should note, though, that the position did initially go against me -- so I had a small floating loss for a bit and while it is currently in my favor, I'm not out yet. So this post is meant to help with entry, but that is only part of the story; proper trade management and exit strategy are also vital for trading success.
Clear Support
The chart below shows a very clear support level in black. We can identify this as a clear support level because of how price has behaved when it reached that level before. Specifically, we have at least three instances of price bouncing off that level and reversing direction. This tells us this may be a level that triggers buyers and sellers into the market to cause a sharp move.
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