Forex Trading- What is support and Resistance?

by FOREXREPORT

The supporting reason to buy that you can't resist. When you
are a trader the two basic patterns to all trading is
support and resistance. You may hear and read a lot about
these strategies. So what do they really mean, and can I
make money from this knowledge.

How can you resist it:

In theory resistance means selling is sufficient enough in
volume to stop the price of the stock or currency from
moving high. Meaning it has hit a ceiling.

Resistance is what is found at the peak of the upward trend.
This is when the selling takes over to cause a counter
trend. It may also mean that a stock starts to trade within
a particular partner. Stocks and currencies can then
encounter major problems trying to break through these
levels. So make sure that you have tight stop losses or
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The supporting argument:

Support is therefore the opposing concept of what resistance
is, where there is sufficient volume to stop prices of the
stock or currency falling. You'll often see prices bounce
from important support levels. This is why you will see a
lot of traders looking for the support and resistance so
they can trade the breakouts.

How can I can find out where the support and resistance is.
Well something very important to consider when you are
looking to evaluate where the support or resistance line is
how often a share price has been rejected at that line. The
more often the trend has been reversed the more powerful the
level of support or resistance. It then becomes much harder
for that stock to be able to break through these, if the do
it can be then a great break out trade.

Markets don't tend to forget too quickly, so these levels
come into play quiet a lot. This is why having a great
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So if you see a support or resistance line occurs straight
away after a steep price movement it is likely that this
level will be a reliable level of support or resistance. The
stock or currency price will simply not have the force to
able to break through this level following a sharp upward
movement or downward spiral.

Make sure that you are always looking at the volume at the
support and resistance lines as this is also very important.
For example if they fail to break through these lines on
strong volume the stronger these lines become. So they may
not break these lines.

Make sure that you learn where the support and resistance
lines are as it may just save or make you a lot of money.
Sometimes you maybe better off waiting for these to be
broken, and they can then be a great spot to put your stop
loss.

Happy Trading.

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