In order to arrive at trading decisions, we can use an indicator, which automatically creates Murray levels. Murray levels are actively used by the traders to analyze various financial instruments, such as currency pairs, futures and stocks.
Murray levels represent 4 resistance and 4 support levels.
The levels of 8/8 and 0/8 are the levels of final resistance. These levels are the strongest ones, therefore they offer the strongest resistance or support to the price.
The level of 7/8 is the weakest one- this is the point of the halt and reversal. This is a weak level. In cases when the price has gone too far and too fast, the suspension of the price near this level will mean that the price will reverse and sharply go down. If the price does not come to a halt at this level, it will continue to go up to the level of 8/8.
The levels of 6/8 and 2/8 -pivot and reversal. These two levels go next after the level of 4/8 in the ability to reverse the movement in price.
The level of 5/8 –is the top limit of the trading channel. The instruments of all financial markets mostly move between the levels of 5/8 and 3/8.
The level of 3/8 is the bottom limit of the trading channel. In the situation when the price is below this level and is moving upwards, it is very difficult for the price to break down this level. Nevertheless, if the price breaks this level out and manages to maintain above this level for 10-12 days, it will mean that the price will remain above this level, moving between the levels of 3/8 and 5/8.
The level of 1/8 is a weak one. This is the point for the halt and price reversal. This is a weak level. In cases when the price has gone too far and too fast, the suspension of the price near this level will mean that the price may reverse and sharply go up. If the price does not come to a halt at this level, it will continue to go down to the level of 0/8.
The level of 4/8 is used for making analysis and arriving at trading decisions.
The level of 4/8 is the main level of support/resistance, providing the best support/resistance. It is also the most preferable level for opening a new sell or buy positions. If the price is above the level of 4/8 – it is a strong support level. If the price is below 4/8 – it is a strong resistance level.
Placing a buy order:
If the price breaks out the level of 4/8 from below to above, it is advisable to place a buy order with the stop-loss by 20-25 points below the level of 4/8.
The most preferable level for taking profit is above 6/8 или 60-65 points from the level of price opening. It is also advisable to move stop-loss to the breakeven zone when the level of profit reaches 20-30 points.
Sell order is placed:
If the price breaks out the level of 4/8 from top to bottom, you can to open a sell position with stop-loss, which shall exceed the level of 4/8 by 20-25 points.
The best position for placing Take Profit is above the level of 2/8 or 60-65 points from the opening price. It is also advisable to move Stop-Loss to the breakeven zone as soon as the profit reaches the level of 20-30 points.