Support and Resistance levels
Foreign exchange price levels, as with other commodities, is determined by supply and demand from the market. When there is excessive demand, price advances resulting in a bullish market. When there is excessive supply, price declines resulting in a bearing market.
Support is the price level where demand is strong enough to prevent the price to fall further. When the price drops to a certain level, buyers are more willing to buy and sellers are less willing to sell. This means the increase of demand and the decrease of supply. At the support level, demand finally overcomes supply and price starts picking up.
Resistance is the price level where supply is strong enough to prevent the price to move up further. When the price increases to a certain level, buyers are less willing to buy and sellers are more willing to sell. This means the decrease of demand and the increase of supply. At the resistance level, supply finally overcomes demand and price starts declining.
Each peak is a resistance and each valley is a support as shown in the image below. Resistance and support are continuously formed as market oscillates.
When prices break through support or resistance levels, support can become resistance and resistance can become support!
- Support and Resistance levels
- Methods to establish support and resistance?
- Trading trend lines and channels
1. Introduction
2. Support & resistance
- Support and Resistance levels
- Methods to establish support and
resistance? - Trading trend lines and channels
3. Chart patterns
4. Fibonacci
5. Moving averages
- Moving averages
- SMA
- EMA
- SMA versus EMA
- Popular moving average time periods
- Moving averages crossover trading
6. Pivot points
- Pivot points trading
- Range bound trading
- Breakout trades with Pivot points
- Using Pivot points to determine market
sentiment
7. Trading with Elliot Wave theory
Forex Educational Articles & News
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