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SUPPORT AND RESISTANCE

FX:AUDCAD   Australian Dollar/Canadian Dollar
A major mistake traders make is to assume that in order to be profitable you need to use so many tools and it's in fact the opposite.

Let's start off with basic support resistance. We know the market moves up, down and side ways. But it never moves straight up or down. As it moves up or down it will meet levels of support and resistance . It's important you understand where these levels are on which ever pairs you trade.

SUPPORT - you will meet points of support mainly in a downtrend. As pointed out above, you can see there are more points of support than resistance. So remember support will appear below price, below the candlesticks . see it as the floor of the chart.

RESISTANCE - You will meet points of resistance mainly in an uptrend, support is the 'roof' it will appear above price. Price meets head on with resistance levels.

Previous support/resistance turning into future resistance/support - Previous support can turn into future resistance, this is where price will break through this support in a downtrend and the come back and retest this level ( as shown in the chart above) . This previous support is now resistance. This also applies the other way around.

Support and resistance levels are points within the market where price will pivot . There are also levels in the market where price will gain momentum before continuing a move.

You always want to plot these levels on the higher time frames as the levels on the higher time frames will hold more significance. i.e. support on the daily time frame will hold a lot significance than support on the 1hr time frame.

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