Hi, guys! 👋🏻👋🏻👋🏻We continue introduce newcomers with technical analysis and repeat the TA with “oldones”. 😆😆😆 🙌🏻Today we’ll talk about support and resistance levels.
Let's go💪🏻
The resistance and support lines are the foundation of the classic technical analysis. All trend lines, models and figures are just combinations of resistance and support lines.
A resistance line connects important market highs. It occurs at a time when customers are either no longer able or unwilling to buy at higher prices. Simultaneously with each ascending movement of the price, resistance of sellers increases and sales increase, which also puts descending pressure on the price.
The upward trend stops and, as it were, rests on an invisible ceiling, which it cannot penetrate at the moment. If the bulls gather their strength or the bears weaken their grip, then the price is likely to break through the previously established resistance level. Otherwise, the reverse price movement (the so-called "rollback") is inevitable.
The support line connects important lows (bottoms, soles) of the market. The emergence and existence of support lines is exactly the opposite of resistance lines.
Here the “bulls” change places with the “bears”.
Sellers are active players in the market who push the price down, while buyers are the defending side.
The more active sellers are and the more passive buyers, the higher the likelihood that the level of the support line will be broken and the price will go further down.
The lines of resistance are always above, the lines of support are below.
If both the resistance line and the support line are strong and hold long enough, then depending on their combination, various images and associations arise, which give the name to trending models and figures.
It should be noted that it is better to draw support / resistance lines on the charts through the zones of price accumulation, and not through maximum emissions. A massive accumulation of prices shows the behavior of the determining mass of traders, and emissions are just the panic actions of the weakest market participants.
It should also be noted that the values of the levels are stored in the memory of traders and if some time when some events occurred when approaching a certain level, then the next time when approaching the same level there is a high probability that the trader will perform actions in that direction, where the price was moving the previous time.
The more times a trend encounters its resistance or support, being unable to overcome them, the stronger signal about the weakness of the trend we receive, and the greater the likelihood of a reversal in the future.
Often resistance changes places with support, and support changes with resistance. It's all about psychological factor.
I hope you were interested and learned something new 😸, are U?🤔
A good way to find support and resistance is high time frames ... such as 4h
You can easily see the most common price there
Or if you have pro+ or premium account you can easily use volume profile indicator to see the common prices in different places of market.
Thanks about the topic my dear friend.