above. Understanding how they think provides you with insight into why the market ranges and breaks out, and why key levels act as support and resistance. I believe price action trade setups have a much higher probability of working out in our favor when we look for them at these confluent key levels in the market. Even though a bank trader only has knowledge of their own book, this grouping of stops is generally happening across a number of banks at the same time, so they will make assumptions about the positioning of the market. By watching the price as it approaches one of the boundaries we can predict with great accuracy where the price will trend next. This way they can minimise their chance of losses and safely make money from the order execution. As such, a swing point does not need to be confirmed by multiple rejections of price in order to be considered a valid support or resistance level, rather the actual swing in the opposite direction itself creates a new level of support or resistance.
Looking at the chart now, you can visually see and come to the conclusion that the support was not actually broken; it is still very much intact and now even stronger. An event-area is a price level or zone that saw a price action signal form and then a large directional move or event occurs. Wait for the price to approach one of the boundaries to make a move. Horizontal levels are fundamental in most. Key levels occur in a variety of market scenarios, and we can combine these key market levels with simple price action strategies to obtain a high-probability trading strategy. Note that just before the trading range finally broke out lower, a long-tailed pin bar formed that showed rejection of the interior of the range, once the low of this pin bar broke we saw a significant move lower. The more often price tests forex lira usd a level of resistance or support without breaking it, the stronger the area of resistance or support. One thing to remember is that support and resistance levels are not exact numbers.