Technical Analysis Basics – Support and Resistance

Two of the most popular and well known Forex trading concepts are the Support and Resistance strategies. Support and resistance are the levels in the market that price has been unable to break out of. Support levels are the levels where price cannot break below. Any breaks that do occur are temporary with the price soon returning to a higher level. Resistance levels act as a ceiling, preventing the price from rising higher and ‘force’ the price back down if it tries to break above the level. Support and resistance levels are not exact numbers but are indicators showing traders the level at which a price is likely to bounce back based on past performance.

These strategies are useful especially for trading short-term as they encourage traders to trade in the direction that is popular to many others.

See the video below for an explanation and trading Support and Resistance.

Technical Analysis Basics – Support and Resistance

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