Simple Trading With SNR
In trading there are many strategies that can be used, one of which is determining support and resistance levels. Support and resistance are the most frequently used technical analysis methods in forex trading. The terms support and resistance are used by traders to indicate the price level on the chart which acts as a barrier or the term bounces, at a certain price level the movement is stuck (cannot go higher or fall deeper).
Every time the price moves up and then immediately drops back down, the highest point reached before the price moves down again is called resistance. While the low point reached before the price moves up again is called support. Thus, they will continue to form all the time as the price moves up and down.
How to Determine Support and Resistance
The important thing for traders to remember is that support and resistance levels are not exact numbers. Often traders see the price move beyond the support or resistance line that the trader has made. However, it was not the breakout that occurred, but the 'market is testing' the support or resistance level. When traders use candlestick charts, the test of this market is seen from the shadow of the candlestick.
The highest and lowest prices in candlesticks often deceive traders because usually these two prices are formed from reactions that arise from traders in the forex market. Therefore, when determining areas of support and resistance, avoid using market reflexes that arise. Look for the actual price movement, one easy way is to use a line chart. Using a line chart, look for areas where the price movement forms more than one peak or valley.
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