Marking correct support and resistance levels is a painfully tough process for most forex traders. I outlined the correct method of identifying and drawing the levels in my “how to draw support and resistance lines article” but unfortunately the method I presented was quite long winded, especially for beginner traders. Luckily this is about to change, because just recently I’ve come across an indicator which speeds up the process of drawing and marking the levels dramatically. Although it’s not a true support and resistance indicator in the sense that it only marks the levels you should use on the chart, it does mark all the places where support and resistance levels exist in the market, which makes it infinitely easier for us to find the correct levels.
Before continuing I highly suggest you take a moment to read my article on how to draw support and resistance levels. The reason why is because the method I use to find and draw the levels differs greatly from the methods you’ll find in other articles availbile on the web. Most websites (and books for that matter), don’t actually teach people how to draw support and resistance levels. They just give vague advice on where the levels are found and not much more. In my article, I show you exactly where the levels are located and the precise points you need to use to draw the levels on your chart.
If you don’t understand my way of identifying and drawing the levels it’s going to be difficult for you to use the support and resistance indicator contained in this article, so please check that article out first before proceeding.
The Support And Resistance Indicator
If you took some time to read through the article you’ll know that my method of identifying support and resistance levels involves marking the points where recent reversals have taken place with lines, in order to come up with an idea of how many levels can be drawn from the current price action. Drawing the levels themselves means finding out where the round numbers nearest the reversals are located, as these are the actual support and resistance levels that exist in the market.
The problem with this method is that although you will end up with the right support and resistance levels on your chart, the process of actually marking the levels themselves is quite time consuming, especially when the market is moving fast and you have to mark new levels quickly. What the support and resistance indicator in this article does, is shorten the time it takes for you to mark the right levels on the chart. It does this by marking all the round numbers on the chart for you automatically.
Using my method you would mark the round numbers last after finding out where the reversals have occurred from similar prices to one another. By having the indicator mark the round numbers first, you already know where all the potential support and resistance levels are located, so you don’t actually have to mark the or round numbers or reversals on your chart by hand, you can just eye up where they are found by looking to see which round number lines have caused multiple reversals to take place.
I’ll show you how to do all this later on. For now download the indicator and read the instructions below to install it onto MT4.
How To Install And Configure The Support And Resistance Indicator
Installing custom indicators is a relatively simple process, but it’s one which can be quite confusing if you’ve never installed any custom indicators before. The following section is just going to be a small step by step walk-through on how to install and configure the support and resistance indicator so that it displays the correct support and resistance levels on the chart.
The first step is to open up the data folder found under the File tab on MT4.
The following set of folders should appear. Click on the folder titled Indicators and you should see a number of files similar to ones below show up.
If you’ve followed the steps correctly you should see the Sweet Spots GOLD indicator in the Custom section of the Indicators list.
With the indicator now installed, the last thing you need to do is configure it correctly so that it shows the right round number levels on the chart.
When you select the indicator to have it placed on your charts the following box should appear. Simply navigate to the Inputs tab and copy the settings you can see I’ve set the indicator to and click OK.
If you’ve done everything correctly your chart should now look like this……….
Each of the blue lines you can now see on the chart represents a round number level. The solid blue lines are the big round numbers which usually tend to cause large reversals to take place, whilst the dotted blue lines are the normal round numbers where common reversals originate from. You also tend to see big reversals originate from the 500 levels, but unfortunately the indicator won’t mark the 00 levels and 500 levels in different colors, so it’s a good idea to just mark them yourselves.
How To Use The Support And Resistance Indicator
So with the indicator now installed and configured properly we can begin using it to find where support and resistance levels are located. As you already know the round numbers which the indicator draws on the chart mark all the possible points where support and resistance levels exist in the market. It now up to us to determine which of these round numbers are actually support and resistance levels worth monitoring. This is done by identifying the round numbers which have caused multiple decent sized reversals to occur.
Out of all the round numbers you can see the indicator had marked on this chart, there are just two which are support levels and two which are resistance levels. For you to find out which of these round numbers are the support and resistance levels worth watching, all you have to do is look for the round numbers which caused multiple reversals to take place.
You can see how each of the round numbers I’ve now marked as support and resistance levels caused multiple reversals to take place, thus confirming them as being support and resistance levels. Like I said in my drawing support and resistance levels article, when you’re marking the levels on your chart, make sure the round numbers you mark as support and resistance levels have caused at least 3 reversals to take place off the recent price action. If they’ve only caused one or two, go back on your charts until you find the last point where three occurred and then mark the level based off that.
Hopefully you can see how the support and resistance indicator makes it much easier for us to draw the correct levels on the chart. Without the indicator we would have had to have marked each of the reversals in the example individually first, and then tweaked the lines going through these reversals so that we can figure out where the support and resistance levels are located. By having the indicator we can completely bypass these steps, because it already shows us where all the possible support and resistance levels are found, we just have to determine which pf the round numbers the indicator marks are the support and resistance levels, which as you could see from the example is very easy to do.
If you need any additional help installing the indicator or finding support and resistance levels, please let me know in the comment section below.