Support and Resistance is one of the most popular and accurate price lines drawn by traders to identify the possible buy and sell trades.
Understanding and trading via support and resistance level are very easy you just need to remember some quick easy rules that I am going to discuss in this article.
What is Support and Resistance levels?
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, If due to any market reasons if the price breaks the support level then it is preassumed that the price will be dominated by sellers until the next support level.
Similarly, 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, If due to any market reasons if the price breaks the resistance level then it is preassumed that the price will be dominated by buyers until the next resistance level.
How to find Support and Resistance Levels?
Drawing Support and Resistance levels is very easy. Here, to illustrate the concept I am going to use Olympe Commerce. You can also create a practice account on the same.
Examples:
Summary:
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