Support & Resistance for Beginners

24 בנוב׳ 2016

Support and resistance acts as a barrier from preventing the price of an asset from getting pushed in a certain direction. It is one of the more difficult concepts within Technical Analysis, there are various ways to identify these price levels, and even after identified, there are plenty of ways of integrating and trading with them.

Today I'm going to simplify it for all of the beginners on the platform (please remember to read the note provided).

What is support? Support is the price level at which buying is thought to be strong enough to prevent the price from declining further.

What is resistance? Resistance is the price level at which selling is thought to be strong enough to prevent the price from rising further.

The most common way to trade it is breakouts, this is when you buy or sell whenever price passes through a support or resistance level. As you may know support and resistance levels won't hold forever even though they can hold for a long time but the reality is... Eventually they will break and as a result of a breakout the moves can be really powerful. However there are some implications with this, many traders get in too quick.

You may be thinking what should I be waiting for? Validation. As a key pointer wait until the candlestick has closed above resistance or below support until entering the trade, this way it will validate the price move up or down.