Support and Resistance are the very building blocks of technical analysis, indispensable if you want to trade in the live markets.
They are the focal points in how much a downtrend or uptrend could pause or change direction. Well-use of support and resistance lines can greatly increase the efficiency of your trading strategies and approach.
Support is a level at which a downtrend is expected to pause due to a lift in demand. It becomes a floor, keeping the price from decreasing further. Support Tradings generally try to buy near the resistance levels and should expect a price rise.
Resistance, on the other hand, shows the price level where an uptrend might have to deal with selling pressure which stalls or reverses it. This is like a ceiling for the price, not able to go above. Traders usually sell or go short near areas of resistance.
These levels of support and resistance can be found through these techniques:
We need good risk management to trade those support and resistance levels. To protect your stop-loss; Place it just below the support, just above the resistance so the price can move towards your live stop loss if the expected direction is incorrect.
Finally, support and resistance in trading are a very basic but important technical analysis tool that allows traders to use historical price levels when making decisions. Traders can use these levels effectively to make their trading profitable and increase the ability to profit from volatility.
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