When a support and resistance level meet...

I think it is pretty safe to say that resistance and support lines are the most popular tools used in technical currency trading. That's probably true to all markets. Over the past couple of weeks I've been looking into manual Pivot Points, instead of calculated ones. What I mean by that, is actually looking at charts and drawing the lines versus calculating them using previous and current price levels. The strategy described below is based on the work of Sam Seiden, I am not sure if he created this or not but it's his work that got me thinking about this. Instead of just simply drawing lines and buying or selling off of them. I wanted to come up with more rules to become more selective in trading off of support or resistance lines.



What I noticed when looking at these lines was that the best ones to take are ones were the current support (or resistance) level acted as a resistance (or support) level in the near past. If you look at the chart above, there is a very clear line at the 1.2732 level with three touches within the past couple of weeks but what makes this line even more interesting is that at some point, around 3 months ago, it was actually a resistance level!

Usually I like to write these blogs before the price moves but for this one as I've been typing and getting distracted all day the market had actually already moved in the direction I was looking for, as you can see in the chart above the trade was already in profit for 30 pips! And as of an hour after I took the screen shot the trade is up 100 pips!