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How to Use Support & Resistance + Rate of Change (ROC) for Momentum-Based Breakout Trading?

Last Updated on March 14, 2025 by Arif Chowdhury

Ever sat in front of your trading screen, wondering why your trades aren’t hitting the mark?

Or maybe you’ve felt that gut-wrenching frustration when a breakout happens, and you missed it?

You’re not alone.

As a seasoned Forex trader since 2015, I’ve been there. I’ve honed my skills through trial and error, and I want to share a key trading strategy that can change your game: using Support & Resistance combined with the Rate of Change (ROC).

Let’s dive in!

Understanding Support & Resistance

Support and resistance are the bread and butter of technical analysis.

  • Support: A price level where buying interest is strong enough to prevent the price from falling further.
  • Resistance: A price level where selling pressure is strong enough to prevent the price from rising further.

Why does this matter?

Because identifying these levels helps you predict potential price movements.

Why Use Support & Resistance?

  1. Identify Entry and Exit Points: Knowing where price might bounce or reverse gives you a strategic edge.
  2. Risk Management: You can place stop-loss orders just below support or above resistance to protect your capital.
  3. Trend Confirmation: When prices break through these levels, it signals strong momentum.

Adding Rate of Change (ROC) to the Mix

Now, let’s spice it up with ROC.

ROC measures the speed at which the price changes. It’s essentially a momentum indicator, showing how much the price has changed over a specific period.

Why Use ROC?

  • Identify Momentum: Helps you spot strong trends and potential breakouts.
  • Filter Trades: Only engage when momentum is strong, reducing the chance of false signals.

The Strategy: Combining Support & Resistance with ROC

Here’s how you can implement this combo:

  1. Identify Key Support & Resistance Levels: Use historical price data to pinpoint these levels.
  2. Look for Breakouts: When the price approaches resistance, watch for a breakout.
  3. Check ROC: Ensure the ROC is rising as the price approaches these levels. This indicates strong momentum.
  4. Enter the Trade: If the price breaks out above resistance with rising ROC, consider entering a buy position.
  5. Set Stop-Loss: Place it just below the broken resistance or above support for a sell trade.

Example in Action

Imagine you’ve identified a strong resistance level at 1.2000 on EUR/USD.

As the price approaches this level, you notice ROC rising.

This tells you that momentum is building.

Once it breaks above 1.2000, you enter a buy trade, confident in the momentum pushing the price higher.

Why My Trading Bots Excel

This strategy is part of the arsenal I use in my 16 trading bots.

Each bot is designed to leverage the power of Support & Resistance and Rate of Change along with other strategies to ensure maximum profitability.

These bots trade on major pairs like EUR/USD, GBP/USD, USD/CHF, and USD/JPY.

With a diversified approach, each bot minimizes correlated losses, giving you a robust trading experience.

And the best part? I’m offering this EA portfolio for FREE!

So if you want to take your trading to the next level, check out my trading bots.

Tips for Success

  • Stay Informed: Follow economic news that might impact currency pairs.
  • Practice Risk Management: Never risk more than you can afford to lose.
  • Use Demo Accounts: Test your strategy before committing real money.

Choosing the Right Broker

Now that you have a solid strategy, it’s crucial to choose a reliable broker.

The right broker can make or break your trading experience. Look for:

  • Tight Spreads: Helps you save on costs.
  • Fast Execution: Essential for momentum trading.
  • Great Customer Support: You want someone to help when things go south.

I’ve tested some of the best brokers, and I recommend checking out Most Trusted Forex Brokers to find one that suits your needs.

Final Thoughts

Combining Support & Resistance with ROC is a powerful strategy for momentum-based breakout trading.

It can help you identify high-probability trades and manage risk effectively.

Don’t forget to explore my 16 trading EAs, which are designed to implement these strategies seamlessly while you focus on what really matters—growing your trading portfolio.

Happy trading!