Support and resistance is one of the most important chapters in the field of trading.
These terms are used by traders to identify the possible trends of the security price that tends to act as barriers, preventing the price of the asset from getting pushed in a certain direction.
What are Support and Resistance?
Support is the price level that acts as a barrier to the downtrend. It prevents the market from going down constantly.
This is the price level where the downtrend of the price is expected to pause because the buyers are trying their hard to push the market up.
It is expected If the price reaches near the support level the same will “bounce” off. However, If the price breaks the support level due to market fluctuations. It is likely to continue falling until the next support level.
Resistance is just the opposite of Support. It is the price level that acts as a barrier to the uptrend. It prevents the market from going up constantly.
Again, It is expected If the price reaches the resistance level the same will “bounce” off. However, If the price breaks the resistance level due to market fluctuations. It is likely to continue falling until the next resistance level.
Drawing Support and Resistance
The best way to learn How to Support and resistance? or How to find Support and Resistance? is by practising the same on the trading platform. Here, I will use the Pocket Option to illustrate the concept. You can also start practising the same by Opening the Pocket Option practice account.
If you have signed up you first need to click on the drawing menu and select the horizontal line from the same.
Now, connect the two highs for resistance and similarly, connect two lows for support level. You can easily change colour from the options below the line.
Trading with Support and Resistance Lines
Drawing and trading with Support and Resistance lines are really simple. However, It is said that support and resistance level are even stronger if the market is traded in the long time frame.
While trading with support and resistance you just need to remember that If the price is near the resistance level you need to take a sell trade similarly, If the price is near the support level we need to take a buy trade.
As you can see above when the price is near the support level indicated with yellow arrows are the buy trades and similarly, when the price is near the resistance level indicated with green arrows are the sell trade.
Important Point you need to remember:
When you look at the chart above you will note that the support and resistance level are pretty strong. That’s why this is a reliable method and the odds of breaking the price is pretty low.
These levels become even become more If you trade in the high time frame and the best time frame to place the trade is when the price is touching the support/resistance level.
You can easily make multiple trades using the same and make some big bucks.
To summarize, Support and Resistance is one of the most important chapters in the field of trading and the skill of drawing and trading properly is really important.
I will highly recommend you start practising the art of drawing and trading with support and resistance level in the Pocket Option practice account and once you are confident enough about your skills you can then move to the real account. If you still have any doubts do comment below.
We wish you the very best of luck!!