Support and Resistance
Support And Resistance In The Forex Market
By Joel Teo
When the Forex market moves up and then drops back down some, the highest point that it has reached before the drop down is now resistance. As the market goes back up again, the lowest point that it reached before it starts to climb again is now the support. An uptrend line, in it’s most basic form, is drawn along the identifiable valleys, or support areas. A downtrend line is drawn along the identifiable peaks, or resistance areas. To create an ascending channel, you just draw a line that is parallel and that is the same angle as an up trend line, and then simply position the line to where it touches the most recent resistance level. With a descending channel, you just move the parallel line to where it touches the most recent support level. When the market passes through the resistance point, that resistance becomes the support. The more often that the price tests a level of support or resistance without breaking it, the stronger that area of support or resistance becomes.
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Trading Stocks With Support And Resistance Levels
By E.J Sieberhagen
What is Support and Resistance Levels in Stock Trading?
Support and resistance are specific price areas or price levels which either support prices on declines in up trends or which resist prices on rallies in down trends.
In an up trend, short term and day traders will attempt to buy at support or at levels of support. In a down trend, short term and day traders will attempt to sell at resistance levels or in resistance areas.
If support and resistance levels cannot be determined, then you cannot define concise levels in which to establish entry or exit positions in your specific trade. It is of utmost importance for traders to develop effective strategies and methodologies for calculating support and resistance levels. These levels can be determined with the use of various trading tools like Point and Figure charts, Fibonacci numbers and Gann angles.
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Tags: forex market, Resistance, Support