Each of the intraday methods of trade discussed in the series of article with the name “in search of profit” referred to the levels received by means of mathematical computations. The techniques who will be discussed in this section, on the contrary, will deal with a kit of levels of support and resistance which are much more obvious. To put it briefly, we will discuss techniques of use of price extrema of previous day as a method of determination of levels of support and resistance.

If to think about market as of auction where buyers and sellers constantly compete for the beneficial price day maxima and minima of last period represent external restrictions of the accepted value of the price within any certain day of trade. The top price reached during the day, represents a maximum which buyers are ready to offer for the goods, and bottom price represents a minimum which sellers wished to accept. For this reason, the subsequent price action is inclined to remain within borders of obvious price values which have been specified during the previous trading day.

Under usual market conditions successful infringement of a maximum or a previous day minimum is preceded usually by some unfortunate attempts. After successful infringement, such price action often represents important change in market psychology with potential of forming of new trend movement.

One of approaches to exploit this market scenario consists in use of actual break of a maximum or a minimum of previous day as a signal for an input in the market – long position opening at break of a maximum and a short position on minimum break. Use of such method for a market input is quite viable, and, in quickly changing market conditions, can be unique method of participation. However, it is considered that it is enough aggressive techniques because attacks in new areas of the market sometimes can be developed very quickly. Often, infringement of a maximum or a previous day minimum will completely be recovered back to an initial point of break. Otherwise the following most probable level of restoration will be 5-minute 20EMA.
The price analysis concerning maxima and previous day minima can be also useful when the market is in a long narrow range. This kind of the market scenario is often accompanied by considerable movement for limits of a range and sharp increase of variability. Variability increase can sometimes be very sudden and strong enough, leading to the trading days and allows grasping the big profit but only if you have chosen a correct direction of break.

Every time when conditions of low variability have been identified, break of a maximum or a previous day minimum can often serve as a signal that movement from a range is expected and it presumes to enter to us into the market that in it to participate, at small risk. But even before such break occurs, there are some methods which allow to make a provisional estimate of a probable direction of break

People who took the decision to participate in forex trading should start from learning the basics of currency exchange market to make sure you do not have problems with this industry.

There is another option – you can hire professional traders to do this job for you – read more about forex investment here. Also make sure to look for the knowledge in a good forex book.