Support and Resistance is one of the most common tools when trading.
Learning where support and resistance is situated on a chart is the first step to your investing/trading strategy.
Knowing this basic skill can determine whether you buy/long or sell/short or help in your further analysis.
A support level is an area where price has come down to and has respected at least 3 times and then pushed higher. Bounced some might say.
Resistance is a level where price has come up and has been rejected at least 3 times previously.
The higher the time frame the stronger these support and resistance levels will be, I tend to use weekly, daily and the 4 hourly.
When support is broken it becomes resistance, when resistance is broken it becomes support.
Current price action must always be above support and below resistance to make them valid.
If you are having difficulty finding levels I suggest moving to the line chart to cut out some of the noise (wicks).
There is also support and resistance flip which I will cover another day.
Learning where support and resistance is situated on a chart is the first step to your investing/trading strategy.
Knowing this basic skill can determine whether you buy/long or sell/short or help in your further analysis.
A support level is an area where price has come down to and has respected at least 3 times and then pushed higher. Bounced some might say.
Resistance is a level where price has come up and has been rejected at least 3 times previously.
The higher the time frame the stronger these support and resistance levels will be, I tend to use weekly, daily and the 4 hourly.
When support is broken it becomes resistance, when resistance is broken it becomes support.
Current price action must always be above support and below resistance to make them valid.
If you are having difficulty finding levels I suggest moving to the line chart to cut out some of the noise (wicks).
There is also support and resistance flip which I will cover another day.