Support and resistance rejection
A framework for testing reactions at levels that genuinely predate the trade.
Use the one-page practice checklist
Keep the exact settings, long and short triggers, stop, no-trade filters and management rule beside the chart while you replay this method.
Worked example for demo practice, not a live trade signal.Keep the chart simple
What needs to be in place first
- Level is marked before price revisits
- Maximum zone width is fixed
- Minimum room to the next obstacle exists
See support and resistance rejection from both sides
Choose a direction and follow the chart from setup to entry, stop and planned exit. The method stays the same; only the directional comparisons reverse.
Entry is above the trigger, invalidation is below the setup and a profit exit is above the entry.
- EEntryLONG ENTRY — next H1 open
- SStop / risk limitSTOP — extreme − 0.20 ATR(14)
- TTargetTARGET — fixed 2R
The H1 example uses the exact canonical location rule rather than a line drawn after the bounce. The first test of the prior-day low rejects, the stop is 0.20 ATR beyond the candle extreme and target is fixed at 2R.
NO TRADE when the level was drawn after the reaction, it has already been tested today, signal range exceeds 1.5 ATR, spread exceeds 1.5 pips, or the event filter fails.Check the market first
The level predates the current day and has not been touched earlier in the current UTC day.
Wait for the entry rule
Enter at the next H1 open after the first qualifying rejection close back above the prior-day low or below the prior-day high.
Place the stop before entry
Place stop 0.20 × ATR beyond the rejection candle extreme. Risk 0.50% of equity and round down to 0.01 lot.
Know how the trade ends
Take profit at 2R. Exit after 12 completed H1 bars if neither stop nor target trades.
Worked example: first rejection at a prior-day extreme
This version of Support and resistance rejection chooses one answer for every decision so you can repeat it. Treat the settings as a starting point to test, not as proven or recommended parameters.
EUR/USD, GBP/USD and USD/JPY H1 UTC charts; prior day boundaries use completed 00:00–23:59 UTC days.
Only the first test of either prior-day high or low is eligible.
Longs use the prior-day low; shorts use the prior-day high.
Plot the immediately preceding UTC day's high and low and freeze them for the current day.
Add Wilder ATR(14). Define the level zone as ±0.10 × ATR around the fixed price.
A rejection candle must trade beyond the level but close back through it, with at least 60% of its range on the returned side.
Give every tool one job
Direction, timing, volatility and risk are different questions. This stack assigns them rather than asking one indicator to do everything.
Creates a timestamped location before the reaction is visible.
Supplies the price trigger; wick shape alone is insufficient.
Sets zone width, maximum signal size and stop buffer.
- The level predates the current day and has not been touched earlier in the current UTC day.
- The rejection candle range is no more than 1.5 × ATR(14), and the next opposing prior-day extreme offers at least 2R of room.
- No high-impact event for either currency occurs within 60 minutes of planned entry and displayed spread is at or below 1.5 pips.
Enter at the next H1 open after the first qualifying rejection close back above the prior-day low or below the prior-day high.
Place stop 0.20 × ATR beyond the rejection candle extreme. Risk 0.50% of equity and round down to 0.01 lot.
Take profit at 2R. Exit after 12 completed H1 bars if neither stop nor target trades.
Cancel on a completed close outside the level zone before entry, a second touch, an oversized rejection bar, an event/spread failure, or a next-open gap over 0.25 ATR.
Use a constant 1.0-pip spread and 0.1-pip adverse slippage per fill; zero commission and no rollover because the canonical exit is limited to 12 hours.
Move through the chart one decision at a time
- 00:00 UTC: mark
Yesterday's EUR/USD low is fixed at 1.0800 and high at 1.0880 before any current-day candles are reviewed.
- Bars 1–5: preserve first test
Price stays above 1.0800. ATR is 40 pips, making the frozen level zone 1.0796–1.0804.
- Bar 6: rejection
The candle trades to 1.0794 and closes at 1.0808; more than 60% of its range lies above 1.0800 and total range is below 1.5 ATR.
- Bar 6: calculate
Stop is 8 pips below the 1.0794 low, or 1.0786. Check that 2R remains below the prior-day high and the event/spread filters pass.
- Bar 7: enter
Enter at next open plus simulated slippage, size 0.50% risk and place the fixed stop and 2R target immediately.
- Bars 8–19: resolve
Record the first touched level or the bar-12 time exit; do not widen the zone or substitute a later rejection.
A rejected example
Reject a perfect pin-shaped candle at a line drawn only after the bounce. The source and timestamp of the level are mandatory evidence.
Common variations
- Separate variant only: prior-week extremes.
- Separate variant only: break of the rejection-bar high/low instead of next-open entry.
- Separate variant only: engulfing close as the trigger.
Rebuild this method on the platform you use
The written rules work independently of the charting app. Match the same feed, timeframe, indicator settings and completed-candle timing before comparing results.
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Keep every test organised.
The CSV gives you one place to record the setup, costs, execution, outcome and whether you followed your rules.
Download test-plan CSV ↓