Horizontal support and resistance forex trading strategy is based on solid trading fundamentals of support and resistance hence it is one of the most popular strategies among traders.

This trading strategy works as :

• where price has moved up, reverse on hitting the resistance level
• or price has moved down, bounce back on hitting the support level.

These are the very basic ideas of support and resistance.

To find support and resistance levels, the following steps will help :

• Look at the chart.
• Look for a series of low points where price does not fall below this any further, you got your support level.
• Look for a series of high points where price does not rise above this any further, you got your resistance level.
• The more price bounces off this support & resistance levels, the stronger these levels become.
• So next time price comes this level, expect it to bounce again like it did before.

Instrument : You can use this strategy for any currency pairs.

Timeframes :  For 15 minutes and above.

Long Entry :

• One you identify the support level, draw a horizontal support line and wait for the price to fall back to that support line.
• Choose any of the options to trade.

(a) When price falls back and touches the support line, wait for the that candlesticks to close and place a buy stop order 2-5 pips above that high of the candlestick that touches the support line or

(b) Place a buy limit order so when price reaches it, it activates it and you are in a trade or

(c) You can buy immediately at market price when price touches that level.

• Place your stops 10-30 pips below the support line for buy limit or at market orders, Depending on the time frame set the stop loss, the larger the time frame larger stop loss.
• Take profit target levels should aim for the resistance levels below. Set Take profit below the resistance levels so there is a greater chance of your profit target to get hit.

Short Entry : 

• One you identify the resistance level, draw a horizontal resistance line and wait for the price to rise up back to that line.
• Choose any of the options to trade.

(a) When price rises back up and touches the resistance line, wait for the that candlesticks to close and place a sell stop order 2-5 pips below that low of the candlestick that touches the resistance line or

(b) Place a sell limit order so when price reaches it, it activates it and you are in a trade or

(c) You can sell immediately at market price when price touches that level.

• Place your stops 5-30 pips above the resistance line for sell limit or at market orders, Depending on the time frame set the stop loss, the larger the time frame larger stop loss.
• Take profit target levels should aim for the support levels below. Set Take profit below the support levels so there is a greater chance of your profit target being hit.

Trade Management :

• Prefer to close half of your position when price travels to halfway point between the support and resistance levels.
• As your trade moves in favor move stop loss and trail stop your profitable trades to lock in profit.
• The best way as to trail stop is to move behind those swing highs or lows and place your stops just a few pips behind so there is less chance of you getting stopped out prematurely.

Pros :

• It is quite predictable on what price does around support and resistance.
• Will enhance your trade entry due to the use of price action trading especially the use of reversal candlesticks.
• Great risk rewarding ratio.
• Chance of getting stopped out prematurely. Becomes less as stop-loss is tight and placed at ideal locations-behind support and resistance level.

Cons :

• Nothing is 100% correct, the price can break the levels and not obey them.
• Sometimes, there may be false break or spike only to obey it later.