Signing up is free & takes 5 secs only…
I have been testing support and resistance strategies across different market conditions on Olymp Trade. While no strategy guarantees profits, these price levels remain one of the most reliable tools for identifying potential reversal and breakout zones.
Support and Resistance is undoubtedly one of the most important concepts in trading, and How to Draw Support and Resistance on Olymp Trade is one of the essential skills every trader should learn. Support and resistance play a crucial role for traders who rely on technical analysis to make trading decisions.
In this guide, I’ll explain everything you need to know about Support and Resistance and show you how to draw and use Support and Resistance on Olymp Trade effectively.
Support and Resistance Overview
Support and resistance levels work because many traders monitor the same price zones. As buying and selling orders accumulate around these areas, the price often reacts, creating potential reversal or breakout opportunities. While these levels are not always respected, they remain one of the most widely used tools in technical analysis.
Support Level: Support, or सहारा in Hindi, is a price level that helps prevent an asset from falling further. As the name suggests, it acts as a floor where buying pressure is expected to increase.
A basic principle of support is that when sellers dominate the market, they may eventually lose momentum once the price reaches a strong support level. In many cases, buyers step in, causing the price to bounce upward.
However, if the price breaks below the support level with strong momentum, it is likely to continue falling until it reaches the next support level.
Resistance Level: Resistance is the opposite of support. It is a price level that acts as a ceiling, preventing the price from moving higher.
The basic principle of resistance is that when buyers dominate the market, they may eventually lose strength as the price approaches a strong resistance level. This often results in the price reversing downward.
However, if the price breaks above the resistance level with sufficient momentum, it is likely to continue rising until it reaches the next resistance level.
How to draw Resistance and Support levels on Olymp Trade?
Drawing support and resistance levels on Olymp Trade is very simple.
First, log in to your Olymp Trade account. Next, click on the Indicators button.
Select the Horizontal Line tool from the menu.
Now, identify at least two significant swing highs and draw a horizontal line across them to mark the resistance level.
Similarly, identify two significant swing lows and draw a horizontal line across them to mark the support level.
For better visibility, you can also change the colours of your support and resistance lines. Simply click on the pencil icon and choose your preferred colour.
Draw using Trend Lines
Another way to draw support and resistance levels is by using the Trend Line tool.
Click on the Indicators button and select Trend Line from the menu.
Place the trend line at your desired starting point and extend it horizontally to the point where you want it to end.
How to Trade with Support and Resistance Levels
Trading using support and resistance levels is straightforward.
First, select the currency pair you want to trade. For example, EUR/USD
Next, identify the support and resistance levels using horizontal lines.
Once the levels have been identified, keep these basic rules in mind:
If the price approaches a resistance level, it may reverse downward, creating an inverted “V” pattern.
If the price approaches a support level, it may bounce upward, forming a “V” pattern.
If the price breaks through either support or resistance with strong momentum, it may continue moving towards the next support or resistance level.
See the chart below.
Point 1: The price attempts to break above the resistance level, but the resistance acts as a ceiling and the price quickly reverses downward. This may provide a potential sell opportunity.
Point 2: The price briefly breaks above the resistance level but fails to sustain the breakout before reversing lower. In this situation, it is generally better to wait for confirmation before placing a sell trade.
Point 3: The price breaks below the resistance area and eventually reaches the support level. If buyers begin to regain control and the price starts moving higher, it may signal a potential buying opportunity.
Point 4: The price touches the support level and shows a strong bullish rejection. This could provide a potential buy opportunity if the upward movement is confirmed.
Trading involves financial risk, and no strategy can guarantee consistent profits. Always test any trading strategy on a demo account before using real funds and apply proper risk management.
My Trades Using Support and Resistance
I took around seven trades using the Support and Resistance strategy. I used a 1-minute chart to identify entry points.
Whenever the price touched a strong support level, I placed a 5-minute Buy trade. If the market was already moving upward, I also placed a 1-minute Buy trade in the direction of the trend.
Similarly, whenever the price reached a strong resistance level, I placed 5-minute Sell trades. If the trend was already bearish, I also entered 1-minute Sell trades in the direction of the trend.
I hope this guide has helped you understand Support and Resistance on Olymp Trade and how to identify potential trading opportunities using these levels.
The best way to master any Olymp Trade strategy is through regular practice. I recommend testing this strategy on the Olymp Trade Demo Account before using it with real money.
I wish you the very best in your trading journey.
