Is it better to close when price reaches resistance level?

I see it happens to me. For example I place a buy trade, and then price reaches resistance level. Like now 1.1396 on eur usd, but TP is not reached yet, it is far away.

Often hanppens that after reaching resistance level, price drops. So maybe I shoudld close trades and then if drops, buy again. Or if breaks level, then wait till drop after break and then buy?

Or better to wait and hope that price breaks the level?

Or better maybe not close, but set trailing stop like 10 pips?

Logic would be - when we are at resistance level, it is less likely to get higher, than drop. Same as we do not buy near resistance, we buy near support.

it depends on how reliable the resistance level is i guess, or how often price has reacted to it (the more times price has reacted to it, the more reliable it is).
if you want to still be in the trade and hoping that price will move to your direction, you can at least move the stop loss to secure some profit.

maybe someone else can give better answer.

It depends on what your strategy tells you to do. That's why you should journal your trades so you can determine how to handle the situation. There's no right or wrong way to go about it. The fact is that some will eventually break past resistance or support and some will hit a wall and reverse.

horses for courses.

on the daily, a 20 pips zigzag is nothing, on a 5 min chart scalping it is huge difference.
know what you trade, and set your expectations accordingly.

Reversal trading is not in beginning stage! I see, many pro traders also avoid reversal patterns, because it consists of so many challenges! The challenge is, there is no specific point form where reversal pattern comeback!

I err on the side of doing that.

It works better for me, overall, than waiting and seeing.

I can always re-enter, but in practice I seem to do so only rarely.

As mentioned above, your perception of the likely strength of the resistance/support is also relevant, though.

"How recent" and "How many touches" are the two main issues that alter my perception of that.

its better to close only when price reaches tp or sl. Dont give too much weights on sup-res, sometimes they hold sometimes not

Well, that is relative.

What if instead of bouncing off, price breaks out, then you'll miss a lot of profit.

I think it depends on the type of trader you are.

If you trade short-term, it may be good setting SL and TP.

But if you trade Medium/Long Term, I consider it only makes sense to set a SL level= to limit your loss

but why would you want to set a TP level = to limit your profit?

I think unless the chart is "telling you" that you must get out, you should stay in...

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Found this article online:

* Trading Breakouts and Reversals at Support and Resistance

Have you ever entered a trade setup and wondered why price action almost immediately turned against your position?
Support and resistance (S&R) must've been the cause of this sudden reversal.

* Price Reactions in the S&R Zone

Price action has to make a 'decision', or a reaction when it approaches support and resistance:

1. The price can break below support or above resistance.

2. The price can bounce at support or resistance:

2.1 The price can show a mild bounce where the price goes sideways;
2.2 The price can show a strong bounce where the price reverses.

Traders can judge which scenario is more likely by analysing the charts.

* Breakout Vs. Reversal Calculation

The main equation is this:

- The force of price action versus the strength of the support or resistance zone.

The balance between the two factors will decide whether the price will break or bounce.

Here is how the equation works out:

- Momentum (price action) is stronger than S&R zone → breakout.

- Momentum (price action) is weaker than S&R zone → bounce/reversal.

Hopefully, the 'formula' will help you assess the market structure with more clarity.

Be aware that this is not an exact science, but rather a rough rule of thumb to assess the market.

* Measuring the Strength of Support and Resistance

Let's start with measuring the strength of support and resistance (S&R).

The two most important aspects when analysing the potential strength or weakness of the S&R:

1. Points of confluence
2. Time frames

Points of confluence:

The more tools and indicators that align at a price zone, the stronger the support or resistance becomes.
The strongest areas have at least three reasons that confirm an S&R zone.
The S&R is usually weaker when only one or two reasons are present.

Time frames:

Support and resistance have more impact on higher time frames like daily, weekly, and monthly charts.
Also, keep in mind that support and resistance is stronger when analysing it on one time frame higher than your entry chart.
The S&R on the same or lower time frame than your entry is typically weaker.

* Momentum and the Number of Approaches

The other side of the equation reviews momentum and price action, which offers two critical insights:
The presence or lack of quick price action (momentum);
The number of approaches or attempts to break the S&R.

Momentum:

Quick, impulsive price action is indicated by a few relatively large candles that mostly move in one direction and have candle closes around the candle high or low. Here is how momentum plays a role:

- When momentum is visible, the chance of price action breaking above the support or below the resistance level or zone increases.

- When momentum is NOT visible or price action is showing divergence patterns as well as weak or correction price action, the chance of price action breaking above the support or below the resistance level or zone decreases.

Number of approaches:

The chance of a breakout varies depending on how often the price reaches the S&R zone. Here are the guidelines:

- First attempt: A bounce is more likely. On the average, the price tends to respect the S&R when it approaches the S&R zone for the very first time.

- Second attempt: Both a bounce and a breakout are equally likely.

- Third attempt or more: A breakout becomes more likely. A breakout starts to increase its chances when the price tests the S&R for the third or fourth time as the repeated pressure to push above the S&R indicates the strength of momentum.

* Letting Price Action Decide the Winner

The above-mentioned equation is therefore as follows:

Power of momentum = speed of price action and number of approaches;
Strength of S&R = points of confluence plus time frames.

The balance between both sides will indicate the likely winner but there is another key factor that plays a vital role:
Candlesticks indicate how the markets actually react to the S&R zone.

Momentum vs S&R equation indicates whether a bounce or break is more likely, but the candlesticks provide key information about how the price is actually responding.

By analysing momentum, S&R, and market structure in general you're able to identify whether you prefer to trade in a bullish or bearish direction and whether you are interested in a breakout or bounce.

In some cases, you could even be interested in both.

However, the candlesticks and the candlestick patterns at the S&R zone basically confirm or invalidate your analysis:

With a confirmation, you have a potential entry;
With an invalidation, you stay out of the trade setup.

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Most folks here misunderstood the trading concept of support and resistant. In any given prevailing bullish trend there can only be resistant 5-20 pips on top or above the actual resistant or support level. Conversely in a bearish trend there can only be resistant 5-20 pips below or under actual resistant level. Any breach of which will reverse the trend in the prevailing PA.
There is no such thing as support and resistant happening simultaneously in any market condition except either one or which.
Hope it can help to elucidate/clarify the common misunderstandings of support and resistant. This is a basic concept which must be understood before anyone can advance to be a better trader. Cheers and happy pipping,

GS

GS

Swissqoute +2 - price hit resistance
Oanda Gmt -4 - slightly crossed resistance
XTB +3 - Price still not at resistance

Then price turns.

I trade 3 to 4 broker's live platform and found that out.
I move my stops or trail to 5 plps or closer.

If you buy, then you should monitor the levels of resistance to closing. And vice versa. Indeed, the level may be too weak to stop the price, it is necessary to take into account its importance and influence on the market in the past. Also, there are various strategies, such as Fibonacci or Gan, where everything is based on levels.

even if it is nothing, it is potential 20 pips profit. So price moved up, I close the trade, wait for drop of 20 pips, and buy again. I have practicaly same buy position, but made 20 pips more. Just thinking about it.

Recently this was with oil - huge candle down. I was selling, happy that I had good position. And then price moved almost half of candle back. If I would have taken profit, then it would be good. And then when the candle moved back, I could have sold again. It was on august 24. I sold at 48.32 on 23 day. It is so nice to see quick profit. But when it goes in quick profit, it of ten goes to opposite direction it looks so.



I try to do this on key levels, where breaching them is much smaller probability than bouncing back. So I want to collect money while I can. Sometimes its enough to have a spike where you collect money. I remember recently with xauusd: I took profit at 18d 1294.84 - if I had not limited this, then now 4 days passed, it does not even test this level. So that is so awesome to take quick profit while you can. Looks like 1291.06 level is strong, but price is testing it and maybe it will be breached.

On friday there was huge spike down, I wish I had pending order to buy, and taking profit at 1291.06 would be very nice, because it would be quick. On monday maybe again the price will move down.

Yea, or maybe 1291.06 level will be breached on xauusd on monday or next week because of this

Strong analysis strong results, weak analysis weak results. If you had done enough testing of your strategy you would not need to ask this question, which is frankly impossible to answer.