Pullbacks occur when a swing high/low has been broken – then price makes a “pullback” to the level. In the picture below, you can see that once our swing high resistance is broken, it turns into an “overlap support”.
3. Overlap Resistance / Overlap Support
An overlap support/resistance can only occur when price has broken a swing high/low and made a pullback to the pullback support/resistance. Only after price has bounced off our pullback support/resistance, then it turns into an overlap support/resistance. You can similarly refer to the picture above to better understand.
VIDEO OF OUR SUPPORT AND RESISTANCE INDICATOR IN ACTION
Watch me as I explain how to use this powerful tool in my own trading.
EXPLAINING RESISTANCE
Learn how to identify resistance zones with our support and resistance indicator
Remember : Resistance is always above price. Support is always below price.
We will now look at how our Support and Resistance indicator for MT4 identifies the 3 major types of support/resistance as mentioned above : swing high, pullback and overlap.
Finding swing high resistance on our MT4 Support & Resistance Indicator :
This is really straightforward. We don’t just pick any swing high, we pick the major swing high. How we define major swing highs here is based on the parameter we can adjust called “Swing sensitivity“. The higher this value, the more significant our swing highs are.
This picture below is when we have a swing sensitivity of 100. This means we only pick swing highs where there are more than 100 bars to the left and right of the major high. Notice there are just a few major lines?
