USING RESISTANCE LEVEL TO SET TAKE PROFIT
If you are in a long trade, key resistance areas can be a good place to set your profit target levels. If you are in a short trade, support areas can be a good place to take profit.
The chart below shows an example of how resistance can be used to take profit when you have a long position and prices are moving upwards in your favour:
1. Long entry before uptrend
2. Area of prior resistance
3. Profit target is set using the prior resistance level.
As you can see in the chart below, after the initial entry into the market comes a favourable move up to a level of resistance. At this point the price begins to stop and may even reverse direction.
In this example, you should look to take profit where the price first reaches the level of resistance.
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