Scalping with support and resistance is effective because these are points when you can expect some reaction from the price. You can:
- look for breakout
- look for correction from support or resistance line
Below you can see example of price consolidating around 1.1855 level. Breakout was a good place to enter a long trade:
Another way of trading this situation was to short every time price gets near to the resistance line. So scenario is simple – after move to the resistance we wait for signal, short and go for 10-20 pips profit:
You can use important averages like 100 or 200 as a support / resistance areas as well:
Forex scalping – Pivot Points
Pivot Points give you very valuable information which you can use in many different trading strategies. In scalping too.
To be effective, you want to go short when a market is overbought (near resistance lines) and buy when it is oversold (near support lines). Take a look at an example below. After a strong move up price get near the daily R2 line. It was a good place to go short, after confirmation from Stochastic:
In scalping, you can use daily pivot points which are calculated on previous day data. If you trade on lowest time frames and you want to keep trade for a short time then you can try hourly or 4-hourly pivots. Go to settings and select true next to hourly:
You trade it similar to how you would trade normal daily pivots. You look for short opportunities near resistance lines and long near supports.
Ine the example below you can see that in the first hour there was a short opportunity near R2 line. Price stopped in a halfway to the R2, later we saw a signal from Stochastic.
The second hour did not give us any trade chances.
In the third hour similar to first one, R2 was a good place to short after a signal from Stochastic. This time price managed to close right at R2 line.
And business as usual ;). You can see a 5m example with pivot lines plotted every 4 hours. There were good signals to go short and long with confirmation from Stochastic.
Notice that you can look for trade opportunity near the Pivot line itself. Like below, around 12 am. Pivot line was almost in the same place as 100 EMA and it was a support for the price. We also had a signal from Stochastic. As it turned out, it was a start of a really strong move.
To sum things up. Pivot points work great and it is always good to have them on chart. I showed you how you can use Pivots based on previous our or 4 hours. If you like to scalp actively then it is a good choice for you.
Basic info about day trading:
- Forex scalping and day trading for beginners
- Best Forex broker, fx pairs, trading hours for scalping and day trading
- Day trading Bitcoin
- Forex scalping and day trading without indicators
- Time frames in day trading
- Trading desk
Management in day trading:
Indicators in day trading
- Forex ATR – trailing stop loss
- Forex Parabolic SAR
- Moving averages
- Bollinger bands
- Fibonacci retracement
- Support and resistance, Pivot Points