Volume & price based support and resistance – the perfect combination!

A wonderful forex trading session with so many lessons, and in particular around the concepts of support and resistance when viewed from both a price and volume perspective.

Price based support and resistance is a key plank of any technical analysis, and here we take a look at these indicators for both MT4/5 and also NinjaTrader. Both give clear and precise levels and just as importantly, the strength of such levels. Support and resistance from a volume perspective is less weel known, and this is where the volume point of control steps in delivering high volume and low volume nodes on the chart based on volume price and time. The longer price remains in a region, the deeper the concentration of volume, and the shorter the period, the thinner the volume. These levels then present areas of support and resistance based on volume, and as with price based support and resistance, then give us a heads up as to where the price action is heading next. As thin levels of volume are approached, we anticipate price to move through relatively quickly, and where we see deeper areas of volume, we anticipate price is likely to congest.

Using price based and volume based support and resistance is an excellent way to blend both approaches into one unified view of where price is heading next, or where it is likely to run into difficulty, which is all we need to know as a forex trader.

By Anna Coulling