Strength of support/resistance zones is proportionate to the number of successful tests of that price level. S/R that is based on market respecting it for years, will be extremely powerful and may stop even the most steady trend. Support or resistance like this, will be much more important than the one visible in 15 time frame and that is based on just two tops/bottoms.
Confluence of supports and resistance zones.
Often times, after noticing Support/Resistance zone. Another one on same price level but at different time frame can be found. Support found on 1 H forex chart becomes much more powerful, when it lies on same price level that can be considered to be support even on a daily chart.
What seems to be great entry opportunity at lower time frames, might become just completely illogical entry after we look at higher time frames. For example we can consider entry on long, on powerful 1 H support. After switching to 4H time frame we can see that entry would be a mistake, as the price is currently at top of historical price range, just before hitting substantial resistance.
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To estimate strength of support / resistance zone we need to consider all available informations. We need to do so, because different forex traders will use different tool to identify those zones.
How to estimate strength of support and resistance in forex
What we want to do, is to see, what most of the forex movers see.
Confluence with different S/R zones, especially in higher time frames. We can look into smaller time frames to improve timing of our signal. However, what might appear to be a valid resistance on our current time frame might be much stronger support on higher time frame.
Consider amount of tops and bottoms that respected Support / Resistance zone. Number of tests is equivalent to S/R strength, with minimum of 2 for us to be able to draw S/R line. Most certainly, even the most important S/R zones wont last forever. Any of them can be broken.
Price reaction. Extremely long wick of the candle, barely penetrating Support / Resistance zone signalises its power. Candle body flirting with the S/R zone (Closing near to its outer edge) may signalise its weakness.
The way how the price approaches support/resistance zone. Typically, price will approach strong S/R zone with candles that are getting narrower as they get closer to the zone. Wicks in direction of price movement will be growing. In other hand, growing bodies of candles as the price approaches, signalise growing price momentum, that might result in S/R zone penetration.
Technical indicators. Consider momentum forex indicators such as MACD or ADX while the price approaches S/R. Growing momentum means that penetration becomes more likely (weak S/R). Declining momentum signalises S/R strength and possible price reversal.
Consider Volume (Volumes forex indicator). When price approaches S/R that is likely to be penetrated, volumes increases. Tips on using volume in forex.
