Important Psychological Levels

FX day traders should be able to identify price areas where large order flows will be triggered through the interbank market, and take advantage of the moves that are created by them.
Such levels include major areas of support and resistance on the daily chart and also round numbers such as double zeros - for example EUR/USD 1.2700.
Careful placement of stop loss and profit target orders enables the trader to execute trades with a strongly positive risk/reward factor.

For example, one might place a stop loss of 15 pips from the level and a profit target of 50 pips on the other side if you are attempting to profit from a bounce at such a level.
One should note that stop loss orders are normally placed somewhat beyond the key round figure numbers and profit taking orders are normally right at the key levels.
Attempting to catch a rebound off a major level is best executed when there are other technical factors supporting the rebound. For example if the market had been trading below its 20 period Simple Moving Average (SMA) prior to reaching the key level, this would support the decision to attempt to catch a rebound at that level.

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