Spotting large reversals can be a very good skill, it can lead to some large moves, which means large profits.

The first thing you need to do before you start, is identify and highlight your major R & S zones.

When price hits one of these zones; look for a counter trend candle closure.

For example, if price is steadily rising but then makes a bearish candle at the R zone, this could be the start of a reversal point.

When this happens, it shows us the buy orders are starting to close and the sell orders are starting to open.

Before the final drop you may see a bullish candle after the bearish candle, this is down to the market makers cashing in on the early adopters and to also fake out retail buyers.

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Range trading is taking trades when price is in a range or consolidation.

Range or consolidation is when price does not have a trend. So, there is no uptrend or downtrend and price is moving between an identified high and low.

As you can see from the image above, price is simply trading in between the highs and lows, which we have identified as support and resistance.

Trading ranges can be very profitable, as it’s very easy to understand how price will move when it reaches the support and resistance levels.

Here are a few key factors to consider when trading ranges;

- Look for wick rejections
- 3+ Touches means a strong S/R level
- Too many touches means a weak S/R level
- Trade with the previous trend if possible

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Support vs Demand Explanation…

There is one major difference between support and demand level.

Demand is when an area/zone is fresh. Price just tests the area once.

If that demand level, gets tested a few more times (usually 3) then we can conclude that it is now a support level.

So, all support levels were initially demand areas, but after the demand area got tested multiple times - they became support.

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Here’s a quick Tip on the 4 Steps to drawing accurate levels.

This method is best used for support and resistance levels / zones, it ignores bodies and wicks and focuses on the general movement of price.

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