Do you know the best support resistance?
In my eight nine years of trading journey, I have seen many different support resistance.
I have even tested some of them 100 times on the Trading Rush channel to find their win rates.
Which one works the best?
Well, I decided to rank different kinds of support resistance that took me many years of trial and error to figure out whether they work or not.
You save time by just directly using the best ones.
Everything I’m going to put near the top of this tier list is good, and everything near the bottom is bad.
Number 6: This is the most common mistake to make as a beginner trader.
I have seen many charts where the support resistance levels are drawn like this.
It’s like they have drawn support resistance at every swing high low.
But here’s the thing I have realized, especially after trading price action for thousands of hours: most of the price movement is random garbage.
Like, many of the swing highs and lows you see are just random movements the price makes when the buyers’ sellers’ balance changes.
Even if there is a long-term uptrend, there will be times when sellers will be temporarily stronger than the buyers, and then buyers will get stronger again.
This movement is more like noise in the main uptrend move.
Any swing high resistance or swing low support you draw in this is not a strong support resistance.
If you want to see why they are not strong, just switch to a higher timeframe.
Many of these swing high low support resistance levels you drew will not be visible on the higher timeframes.
Support resistance work when many people react in a similar way to a price area.
If these swing high low support resistance levels are not visible to most people in the first place, then they are weak.
I have mainly used the swing high low support resistance to exit trades.
Not to enter trades.
I will put this in the B tier.
They are important, but not that important.
Number 5: When I was a beginner trader, one of the price action-only trading strategies that worked for me was the extreme edge support resistance.
Basically, if there was a good big reversal, I used to mark the extreme end of that reversal point with a line.
When the price used to come back to this price level and strongly reject, then I used to take a reversal trade.
This worked for me pretty well!
So, I will put the extreme edge support resistance in the A tier.
Number 4: I have never found trendlines to be good support resistance.
They are good for analyzing trends and momentum.
Yes, the price bounces from them many times, especially if the trend is good.
But most of the time, the price is not bouncing from the trendline because it’s important.
That’s just how the price in a trend moves. Up down up down rhythm.
On top of that, everyone draws trendlines differently.
If it’s not visible to everyone the same way, then people are less likely to react to it the same way.
I will put trendlines in the D tier.
They are good for analyzing trends and momentum, but not as good support resistance.
Swing high low support levels are way better than this.
Many times, you might think the price is reacting to the trendline, but it will actually be the swing high low support resistance.
Number 3: Most moving averages are similar to trendlines.
If you put different length moving averages on the chart, the trending price will probably bounce frequently from one of them.
But just like the trendlines, the price is not bouncing because of the moving average; it’s just how the trend moves.
And yes, moving averages are also good for analyzing the trend and momentum.
However, there is one moving average that has worked way better in my trading journey.
It’s the long-term 200-period moving average.
Think of it like an automatic long-term trendline that works better than a trendline.
On top of that, this automatic trendline will look the same to everyone.
I have seen the price react to this 200 moving average in most trends.
Not always, obviously, and not even exactly at the moving average.
But I have seen the price find support resistance from around this 200 moving average most of the time in trending markets.
Even though I don’t blindly buy or sell when the price comes near it, I many times prepare to take a trade with another entry pattern, such as MA-CD crossover, near the 200 EMA.
I will put the 200-period moving average in the B tier.
This has been very useful in my trading journey.
Number 2: When I was taught support resistance, it was something like this: all lines that look like a mess.
However, as I traded more over the years, I realized that support resistance are not lines.
They are areas.
If we draw them as lines, then it’s the same as drawing a random line on the chart.
Not everyone is going to draw or see the same line.
The only time drawing support resistance as a single line works is at the extreme edge.
I mean, that’s the whole point there: to take a trade at the extreme edge.
All other support resistance that are drawn as lines in the middle of nowhere are not that great.
I will put support resistance as lines in the C tier.
Number 1: The support resistance that worked around 60% of the time when I tested it in one of the previous videos is the clearly visible horizontal support resistance area.
By clearly visible, I mean there has to be a big enough price reversal from that point so that it is also clearly visible on multiple higher timeframes.
This way, most people can see it and therefore react in a similar way.
Here’s one I have on my chart right now.
And here’s another one.
This kind of support resistance area is rare.
So, you will not see them that frequently.
I have a whole detailed tutorial with testing data about this on the Trading Rush channel. Check it out if you want to learn it.
It worked 60% of the time on its own.
I have even used other data-backed indicators, such as MA-CD, to take trades inside it.
Overall, this is the best kind of support resistance area I have traded in my eight nine years of trading journey.
I will put it in the S tier.
That’s all! Thanks for watching!