Support and Resistance in Forex
Support refers to a price level in the market where a currency tends to find buying interest as it falls. This means that it is a level where the demand is big enough to prevent the price from declining further. Resistance is just the opposite. This represents a price level where selling interest is strong enough to prevent the price from rising further. This forms a “ceiling” over the price.
Both of these levels are not always exact and are often viewed as zones rather than precise prices. Market dynamics, economic news, and trader psychology can cause different variations. The more times a support or resistance level is tested without breaking, the stronger it is considered to be. Support and resistance levels can be identified using different methods. One of which is analyzing historical price charts to spot areas where the price has reversed multiple times. Trendlines, moving averages, and Fibonacci retracements are also popular tools used to determine these critical levels.
In daily trading, support and resistance can guide trading decisions in several ways. In this course you will learn about how traders use breakout strategies, anticipating a strong follow-through in the direction of the breakout, how psychological factors also play a significant role in support and resistance, how without considering other factors can prove risky with support and resistance and how its very important to combine these levels with other indicators and market analysis tools to improve the accuracy of trade decisions.
In addition, you learn what the three golden rules are for “Support” and “Resistance”, what happens when either of these terms “breaks” and how they both can affect what is known as a “down trend”. Everything will be made clear, and you will have more skills and understanding on your journey to success in Forex trading.
