The first way to use the support and resistance trading indicator is to identify a range on a chart and buy at the support level and sell at the resistance level. When you use this support and resistance trading strategy, you essentially believe that the market is in equilibrium and that price action will remain in this range for some time.
The second method is known as breakout trading, and it occurs when the price breaks above or below the support and resistance zones, as the name implies (usually, with high trading volume and at times of market news). As a result, a breakout forex trader will usually enter a position when the price moves above or below the support or resistance levels. By doing so, the trader predicts a trend reversal, which signals the beginning of a new trend. As an investor, the longer the range, the longer and more violent the breakout.