Support and Resistance

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Support and Resistance are two of the most vastly discussed features of technical analysis of trading.

They are often regarded as complex analysis by beginners but are of high importance to Professional Traders.

The Support and Resistance refer to two different price levels that help traders decide on their entries and exits.

Resistance levels are referred to the price levels that prevent the market from moving the prices upward.

Support levels denote the price level that prevents the price of an asset from moving downwards.

Like any other Financial markets, the Forex market is driven by buyers and sellers.

In other words, the price of any financial instrument is determined by demand and supply.

The concept provides a constant level that prevents the price of an asset from moving lower or higher.

Buyers want the price to move higher and sellers want the price to move lower.

This is why you need to understand the concepts of trending and trend lines.

This is important to learn more about resistance and support.

Technically educated traders incorporate various technical indicators like moving averages to predict short term drive.

These tools are also very helpful in determining the levels of resistance and support.

A moving average chart depicts a constantly changing line that evens out past price data and allows a trader to identify the levels of support and resistance.

The moving average can be used to determine how price of an position seeks support when the trend is up and how the price seeks resistance when the trend is down.

By determining support and resistance levels, traders can more informed decisions on entries and exits.