How to use support/resistance line rebounding strategy in trading

Line rebounding strategy

This is a pattern that tries to catch the moment in which the price is unable to move through the support/resistance, in which the price cannot break out of these levels.

Rebound strategy

It is believed among traders that the uptrend is over the moment the price touches the resistance level and the first candle closes beneath the line. They will open short positions then.

Price reacts with resistance line
Price reacts with the resistance line

The same applies to the opposite situation when there is a downtrend on the market. When the price hits the support and the first candle closes above it, it is a signal to go long.

Price reacts with support line
Price reacts with a support line

Rebound line strategy in other cases

The line rebounding strategy validity does not end with horizontal lines like support and resistance. Just take a look at the picture below and you will notice, it also works with the diagonal lines which you can draw along the trend.

Price reacts not only with horizontal lines
Price reacts not only with horizontal lines

If you need further information about support/resistance, I encourage you to read the articles about combining trendline with support/resistance and about trading RSI with support/resistance.

Good luck!

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Bart Bregman

Full time day trading, and helping out with Olymp Trade wiki in my spare time to create an awesome platform for beginners. I'm a digital nomad that travels the world while working from everywhere!

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