Forex levels.

Levels are one of the main reference points when opening new Forex trades; they indicate the points on the chart that, when reached, may cause the price of a currency pair to change its behavior.

Forex levels are used in strategies such as breakout and reversal trading, price channel trading, and other options. The key is to choose the right level for your needs.

Commonly used levels in trading include support and resistance, pivot points, Murray levels, and other similar options.

Each level is based on its own indicators, so to improve trading efficiency, it's advisable to use several options simultaneously. The ideal moment is when several levels coincide.

There are two possible outcomes when a significant price level is reached: a trend reversal or a breakout and further movement. A trader's subsequent actions usually depend on this scenario.

1. Support and resistance lines – familiar to almost every novice trader; you can read more about them at the link provided earlier. These lines are based on the price lows and highs over a selected time period. Support marks the lowest prices, resistance marks the highest.

2. Pivotal points – essentially, these are psychological markers that most forex traders use as a guide. For example, if the price of a currency pair hasn't risen above 1.2000 for several months, this value is a strong resistance level. The more often this level reverses, the more significant it is. Round numbers most often serve as reference points, but there are exceptions to the rule.

3. Overbought and oversold levels – although there are no clear boundaries, there are certain levels. The primary tool for constructing them is the Stochastic indicator, which is available in virtually every trading platform. As soon as demand reaches its maximum, the market enters an overbought state, and conversely, with a large number of sell trades, an oversold state may be observed. In this case, levels of 10 and 90 or 20 and 80 can be used, depending on the trader's preference.

4. Murray Lines – essentially, this is a variant of constructing support and resistance lines, but on the currency pair chart, several price channels appear at once, and the wider the channel, the more significant its boundaries.

5. Other options – there are many other variants of constructing Forex levels, their calculations using indicators such as the opening and closing prices of the market, the average price for the day or session, and many other data.

The longer the price holds at a certain level, the greater its value and the more significant the movement will be after breaking through this boundary. In my personal opinion, the most significant of these are support and resistance lines and pivot points. Despite their simplicity, trading using them often yields positive financial results.