Turncoat support in forex is a technical analysis tool used by traders to identify potential price reversals. It is also known as pivot point support, and it is based on the concept that price tends to reverse at specific levels of support and resistance.
The term “turncoat” suggests a change in direction, which is what turncoat support aims to identify. Traders use this tool to determine the level at which the price is likely to reverse, and they can use this information to place buy or sell orders accordingly.
The turncoat support is calculated using the previous high, low, and close prices of a currency pair. The pivot point is the central point, and the turncoat support levels are derived from it. There are three primary levels of turncoat support, which are S1, S2, and S3. These levels are below the pivot point, and they represent potential areas of support where the price may reverse.
S1 is the first level of support below the pivot point, and it is calculated by subtracting the previous high from the pivot point and multiplying the result by two. S2 is the second level of support, and it is calculated by subtracting the previous high from S1 and multiplying the result by two. S3 is the third level of support, and it is calculated by subtracting S2 from the previous high and multiplying the result by two.
Traders can use turncoat support in a variety of ways. One common strategy is to buy when the price reaches one of the turncoat support levels and sell when it reaches a resistance level. Traders may also use turncoat support to set stop-loss orders to limit their losses if the price does not reverse as expected.
It is important to note that turncoat support is just one tool in a trader’s arsenal. It should be used in conjunction with other technical analysis tools and fundamental analysis to make informed trading decisions. Traders should also be aware of the limitations of turncoat support and not rely solely on it to make trading decisions.
One limitation of turncoat support is that it is based on historical data and may not be accurate in predicting future price movements. Traders should also be aware that turncoat support levels may not always hold, and the price may continue to move in the same direction despite reaching a turncoat support level.
In conclusion, turncoat support is a technical analysis tool used by forex traders to identify potential price reversals. It is calculated using the previous high, low, and close prices of a currency pair and is based on the concept that price tends to reverse at specific levels of support and resistance. Traders can use turncoat support to place buy or sell orders, set stop-loss orders, and make informed trading decisions. However, it should be used in conjunction with other technical analysis tools and fundamental analysis, and traders should be aware of its limitations.
