Simple Indicator That Draws Support And Resistance

Technical analysis is an essential part of trading on just about every market, and one of its most useful applications is looking for support and resistance levels. That means every novice trader should learn how to find them as quickly as possible. You can do it manually by analyzing the previous high or low points of a certain chart, but using automated indicators is much more effective and precise. To help you with this aspect of technical analysis, we are going to explain how support and resistance works and which indicators are most useful for identifying them.

About support and resistance

Support and resistance are special price levels that serve as potential pivot points for a chart. Support refers to a price level where a downward trend gets enough buying interest from traders to grow back, and resistance is basically a level where an upward trend suffers enough selling pressure to go down without breaking past this price. Most of the time, the price of any asset moves between these levels, repeatedly trying to go past them and backing up.

When the price actually breaks past one of these levels, it’s called a breakout. Breakouts mean there is a serious change in trend: for example, if the price of an asset breaks through a long-term support level, it may signal the start of a new downward trend. If you can identify support and resistance levels and predict breakouts, you can get an edge over other traders on the market. To do that effectively, it’s recommended to use at least one simple and reliable indicator.

How the S&R indicator works

S&R is a popular custom indicator that draws support and resistance levels on a chart. It works on all timeframes (however, at least M15 is recommended) and with all assets. The indicator is flexible: you can use its settings to customize it to your needs. Adding it to your MT4 is easy: just import the file to add it to your list of indicators.

Other applications

Finding support and resistance levels is useful not just for predicting breakouts. You can also use your calculations to better understand the direction of the current trend, find the best trading opportunities, and set stop-loss orders to prevent losses in case the price breaks through them. Such levels are also important for identifying certain chart patterns. All in all, you should always remember where the levels are currently located and act accordingly.