Basic Support and Resistance (SNR)
Support and resistance look easy to see because they are just dots. However, using these two indicators is quite tricky for beginners. Therefore, traders need to know the meaning of each of these understandings of support and resistance:
Support
Support is the lower price limit that traders in the capital market will find difficult to break for a certain period of time. Support is indicated by a horizontal or slightly sloping line that is at the lower border of the chart. This limit becomes a benchmark for traders to start hoarding other instruments that are allegedly discounted.
When prices are in a downtrend, additional technical analysis indicators such as moving averages can be used to accurately determine support. Even though it has approached the support line historically, analysis is needed so that traders can gauge whether the price will move up or stagnate. It could be that the price breaks through its support and looks for a new equilibrium below the existing support. Obviously, this point tells the trader when to start entering the market or the trader can wait until a new equilibrium is established.
Resistance
Conversely, when prices creep up, traders can get ready to take money by setting a selling price. If likened to a building, support is the floor and resistance is the top of the roof. If the trader does not have a price that is in the resistance area, this is a trader being a spectator. Because, nowadays, an instrument can be said to be too expensive. But sometimes, traders who are provoked by fundamental conditions or existing trends even launch a buying action. As a result, the resistance line can be broken and a new balance is formed.
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