marym
Active member
Support and resistance are fundamental concepts in technical analysis, a method of evaluating securities based on past market activity. In forex trading, support and resistance refer to levels at which the price of a currency pair is expected to face pressure in either direction.
Support is the price level at which buying pressure is expected to be strong enough to prevent further price declines. In other words, it's the level at which demand for a currency pair is expected to increase, resulting in the price bouncing back up. Traders often use support levels as entry points for long positions, with the expectation that the price will eventually rebound from the support level.
Resistance, on the other hand, is the price level at which selling pressure is expected to be strong enough to prevent further price increases. In other words, it's the level at which supply of a currency pair is expected to increase, resulting in the price bouncing back down. Traders often use resistance levels as entry points for short positions, with the expectation that the price will eventually fall back from the resistance level.
Support and resistance levels are typically identified using technical analysis tools such as trend lines, moving averages, and Fibonacci retracements. These levels can be horizontal or diagonal, and they can change over time as market conditions and investor sentiment shift. Understanding support and resistance levels can be helpful for traders in making informed trading decisions and managing risk.
Support is the price level at which buying pressure is expected to be strong enough to prevent further price declines. In other words, it's the level at which demand for a currency pair is expected to increase, resulting in the price bouncing back up. Traders often use support levels as entry points for long positions, with the expectation that the price will eventually rebound from the support level.
Resistance, on the other hand, is the price level at which selling pressure is expected to be strong enough to prevent further price increases. In other words, it's the level at which supply of a currency pair is expected to increase, resulting in the price bouncing back down. Traders often use resistance levels as entry points for short positions, with the expectation that the price will eventually fall back from the resistance level.
Support and resistance levels are typically identified using technical analysis tools such as trend lines, moving averages, and Fibonacci retracements. These levels can be horizontal or diagonal, and they can change over time as market conditions and investor sentiment shift. Understanding support and resistance levels can be helpful for traders in making informed trading decisions and managing risk.
