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Hello…how are you?
Well, today in this article. I am going to teach you Support and Resistance.
Support and Resistance is no doubt one of the most profitable and popular trading techniques used by traders.
Support is the price level that acts as the superhero for the buyers who holds the hand of the buyers by stopping the price to go down any further.
The support level is the price level at which the price of the stock and commodity does not fall any further.
According to this concept the moment the price touches the support level the price will bounce back up in the support of buyers.
However, due to market reasons if the price breaks the support level then it preassumed that the price will be dominated by sellers until the next support level.
Note: Breaking a support level price is very difficult for sellers therefore, it is a very reliable method.
Resistance is the price level that acts as a superhero for the sellers who hold the hand of sellers by stopping the price to go up any further.
The resistance level is the price level at which the price of the stock and commodity does not go up any further.
According to this concept, the moment the price touches the Resistance level the price will bounce back down in the support of sellers.
However, due to market reasons if the price breaks the resistance level then it preassumed that the price will be dominated by buyers until the next resistance level.
Note: Breaking a Resistance level price is very difficult for buyers therefore, it is really a reliable method.
How to draw Support and Resistance lines?
Here, to illustrate Support and Resistance I am going to use Olymp Trade.
If you don’t have an Olymp Trade account click here.
You can also sign up via the form given below.
Once you click the link above you land on the Olymp Trade Homepage.
Firstly, Click on Register.
Now, enter your email, password and hit sign up.
Once you signed up you will land on the Olymp Trade dashboard.
Click on the chart button and select Japanese candlestick from the menu.
Now, your dashboard will look something like given below.
Lastly, click on the indicator button.
Select horizontal line from the menu.
Now, what you need to do is find two highs for resistance level and place the horizontal line at the same.
Similarly, Find two lows for the support level and place a horizontal line at the same.
That’s it!! It’s that simple this how you draw support and resistance line.
How to find support and resistance levels?
Trading with Support and Resistance is damn very easy.
Let’s check some examples
See, at point number 1, The moment the price touches the resistance level we see a huge downfall in price level hence here, we can take a bulk SELL trade.
Similarly, at point number 2, The moment the price touches the support level we see the price bounce back up and here we can take bulk BUY trade.
So, this is the end of this article. I hope you have found this article helpful.
Summing up everything, What you first need to do find Two highs for resistance level.
Similarly, find two lows for support level.
Once you have spotted the support and resistance just remember this golden rule.
If the price of the stock, or commodity touches the resistance level the price will bounce back down. Therefore, here we should take here a SELL trade.
Similarly, If the price of the stock or commodity touches the support level the price will bounce back up. Therefore, here we should take here a BUY trade.
Best of luck 🙂