Pocket Option Support And Resistance Strategy

What Are Support and Resistance Levels

Support is a floor that the price keeps landing on. An area where buying pressure had shown up before, and thus may show up again. Resistance is the ceiling version of it: a spot where selling pressure has capped things before, so far. Neither one is, of course, a ‘hard wall’. It’s not a law of physics. More like a habit the price has picked up, shaped by the market participants on the whole.

The idea of trading around these levels rests on a bit of trading psychology. Traders remember past prices, especially ones where they got burned, or where they got a good entry. So they tend to act on that memory the next time this price comes back.

That collective memory, spread across a lot of individual participants, is basically what turns an ordinary price level into a Pocket Option support zone or a resistance zone that is worth paying attention to. Not magic. Just habit, repeated enough times to matter. A Pocket Option support level, in other words, is kind of like a running record, where traders have already shown up before, and clearly shown their interest.

How to Identify Support and Resistance on a Chart

Sniffing out a Pocket Option support zone, or a resistance zone for that matter, starts with just looking at where price has turned before. Seeing swing highs and swing lows, the obvious peaks and dips sitting right there in the price history. A horizontal line drawn across two or more of these turning points, roughly at the same price, is the most basic version of a support or resistance line, and it works more often than the simplicity suggests it should.

Exact touches are rarely perfect, of course. That's expected. It is also why risk-management matters in trading, and stop-losses are often important. Even around a ‘great’ level, price tends to wobble a bit around a bit, rather than hitting the exact same number every single time.

This is why the line usually gets drawn through a zone. Widening the line slightly to cover a bit of a range can give a more stable and usable picture to work with.

Grading Level Strength: Touches, Volume, Recency

Not every line drawn on a chart deserves the same amount of trust and attention. Some levels have earned it, through thick and thin, but others are pretty much just some lines, and not much more. This can be influenced by a handful of factors. To understand the importance of a level, watch for things like:

• Number of touches of the level. If there’s three, four, or more, this often carries more weight, than if the level showed up only once.

• Timeframe it shows up on. If something is visible on the daily, this might matter more than if something only appears on 5M charts.

• How recent the last test was. A level tested last week often carries more relevance. Remember that market conditions can shift, participants grow or get tired of waiting, and thus old levels can go stale and lose their power.

• Volume at the level. Heavier volume, or sharp spike, suggests the crowd is actually involved in defending that price, and so the level can rise in importance.

Additionally, you can consult this guide for identifying support and resistance levels. It goes further into how to see the strength of a particular setup.

Multi-Timeframe Confluence

One timeframe can be just a start, the reason your interest starts, since you spotted something. It’s often not the whole picture. What’s usually more interesting is a level that shows up on several timeframes, at more or less the same price. This overlap is called ‘confluence’, and it's one of more reliable ways to spot a level worth planning around.

If you’re checking ‘confluence’, it means you’re pulling up the same asset on a couple of different screens (say the 4H, 1H, and the daily), and seeing if the same price area keeps showing up as a turning point.

This kind of cross-checking is covered in a bit more depth in our overview of Pocket Option trading analysis. It can filter out some of the weaker levels, before money gets involved. Which means, fewer trades, but better ones, hopefully.

Psychological Round Numbers as Levels

Round numbers might act as levels because of a little ‘head-game’ that most traders don’t notice they're playing. For example, setting a limit order at 1.2000 is easy. It's a number anyone can just type in, without thinking. But setting one at 1.19847 is not quite as easy, so, comparatively, almost nobody bothers typing that in. Therefore, enough traders taking the lazy, easy-to-type option ends up piling orders on the same rough price anyway, and a clump of orders is really all a level ever is underneath the chart art.

For the same reason stop-loss orders might pile up just past round numbers. Price sometimes pokes a little past a round number, before turning back. Sometimes it’s just because of the random sell/buy orders getting swept. So it’s not a real change of price direction, and that needs to be identified.

Bounce Trading Setup

With bounce trading, you work under an assumption that a level will hold, at least this time. Price will not be pushing through. It's the more conservative of the two main approaches of working with support/resistance levels. This often suits ranging markets, rather than trending ones.

1. Pick a Pocket Option support level with a reasonable track record, more than one touch, ideally showing up on more than one timeframe.

2. Wait for price to reach the level rather than jumping in early on the approach. Getting in too soon is one of the more common ways this setup goes wrong.

3. Look for a rejection signal at the level. Something like a wick, or a small reversal candle pattern. Basically anything that could be suggesting that the level is doing its job well, again.

4. Enter in the direction of the expected bounce, with a stop placed just beyond the level, far enough that ordinary noise doesn't trigger it prematurely.

5. Set a target at the next meaningful level in the other direction, rather than picking an arbitrary number or holding on with no plan at all.

Breakout and Retest Trading Setup

Breakout and retest trading assumes pretty much the opposite: that the level eventually fails, and thus the price keeps going past it. Former support then tends to flip into a ceiling. Former resistance becomes a floor. That role reversal can be the idea for this trading setup.

1. Wait for a candle to close clearly beyond a level (not just poke through it on random wick).

2. Give the market a chance to come back & retest the broken level from the new side, which doesn't always happen but shows up often enough to be worth waiting for.

3. Watch for the old level to hold. See that a former support level acting as resistance from now on, on the retest. It might just be the confirmation this whole approach is looking for.

4. Enter in the breakout direction once the retest holds, with a stop placed back on the other side of the level.

5. Manage the target the same way as a bounce trade, using the next visible level as a reasonable place to plan an exit.

You can also consult our guide to breakout trading. It goes further into this specific setup, and rules that are important with it.

Confirming Signals with Complementary Indicators

Support and resistance levels might work even better with another signal, especially an independent one, that is showing the same thing as they are. This is like consulting a second opinion before closing a trade.

• RSI. Seeing an overbought/oversold reading at a level gives it additional weight.

• MACD. This indicator might show an additional sign that a reversal might happen, if a divergence occurs, or a shift in momentum becomes visible at around the level.

• Moving averages (MAs). A popular moving average (like 50-period, or 200-period) sitting close to a level often adds another layer to it, often making it even more worthwhile to pay attention to.

• Volume. A spike right at the level, in either direction, can say more about conviction of the market than the price action alone ever could.

• Candlestick shape at the touch of a level. For instance, a long wick that’s rejecting a Pocket Option support level, or a small-bodied candle stalling right at the resistance. They can also add a bit of additional weight.

You can look at the overview of technical analysis on Pocket Option for this. It covers how some of these tools can be used in tandem with each other.

Risk Management for Support/Resistance Trades

There’s no setup that is statistically perfect. Nothing works every time. Therefore, risk management matters. This is what can often distinguish a successful Pocket Option support and resistance strategy from a failed one. To do it properly, this checklist can be helpful:

• Risk a small, consistent % of the account, for each trade. What is often recommended is 1-2%, each time.

• Place the stop right away (if you’re using the MT mode at Pocket Option). Don’t change it later on, depending on your feelings about a trade.

• Avoid trading every single level that shows up. Consider your entries. Using a handful of genuinely strong levels often beats having a long list of mediocre ones.

• Train on demo account first, regardless of which mode you’re trading in. Backtest your strategy, if possible, and experiment with it in various market conditions.

• Expect to have failures, such as false breakouts. They happen sometimes, inevitably. Treat them as part of the strategy, working as intended. Don’t think that one failed level means something is immediately broken.

Drawing Levels on Pocket Option Charts: Step by Step

Using a Pocket Option support and resistance strategy requires getting to know the charts, and the tools within them. Thankfully, drawing a line or watching an indicator is a straightforward process. Tools are already sitting in the drawing menu, you don’t have to install anything extra.

1. Open the chart for the asset, and switch to timeframes that fit the plan. Daily or 4H often work well for long-term trends, but spotting specific setups or exact entries sometimes requires 1H, 30M, or even a 5M timeframe.

2. Select the horizontal line tool from the drawing toolbar at Pocket Option.

3. Click on a swing high or swing low, where price has shown interest before, and drag the line across the chart at that price.

4. Repeat for any other levels worth marking.

5. Adjust the line slightly, if price has tested the area more than once at slightly different points. It might be good if line sits through the general zone rather than one exact tick.

6. Save or leave the drawing on the chart, then check back on it whenever price approaches that area again.

Common Mistakes When Trading Support and Resistance

A handful of mistakes account for a lot of the frustration people run into early on with any Pocket Option support and resistance strategy. Most are avoidable, though, such as:

• Trading a level the very first time price touches it, before it's had any chance to prove itself.

• Slapping too many lines on one chart, until it's not clear anymore which ones matter.

• Ignoring broader trends.

• Trading every bounce the same way regardless of the bigger picture.

• Moving a stop further away during a trade, just to avoid taking a loss.

• Treating a round number as an automatic level without checking whether real price history backs it up.

• Confusing a brief pause at a Pocket Option support level with a real bounce, and entering before price has turned.

Practicing these setups on a demo account first tends to expose most of these habits fairly quickly, without any of them costing anything real along the way.

Conclusion

Remember that most of this theory doesn’t work quite as well if the level gets abandoned, if risk-management is not followed, or if there’s no confirmation. A Pocket Option support level breaking on an ordinary Tuesday doesn't care whether the person watching it wanted a bounce or a breakout that day. A plan made before the trade is usually better than doing ‘whatever feels right in the moment’.

Disclaimer: Trading involves significant risk of capital loss and may not be suitable for all investors. Past performance does not guarantee future results.