Sunday, July 20, 2025
  • Login
GoTradingAsia
  • Awards
  • Forex
  • Crypto
  • Stocks
  • Education
  • Broker Directory
  • Contact us
No Result
View All Result
GoTradingAsia
  • Awards
  • Forex
  • Crypto
  • Stocks
  • Education
  • Broker Directory
  • Contact us
No Result
View All Result
GoTradingAsia
No Result
View All Result

Traders Must Know The Roles of Support and Resistance Levels

Anelis May by Anelis May
4 years ago
in Forex & Market, Forex Tips, Learn to Trade

Support and resistance levels assist traders to understand the market better. As we all know, anyone who has a better understanding of the market has a sharper edge compared to those who don’t

Indeed, knowledge is power in trading. 

Basically, support levels indicate prices that a currency will not likely fall below. Conversely, resistance levels indicate prices that a currency will probably not exceed. 

Support and resistance levels can be seen as the ‘oracle’ of market trends because these can predict whether a current trend will keep going or not more accurately. Accuracy is everything in trading. A fool-proof information enables traders to confidently enter or close a position, or place a stop or a limit. 

RelatedArticle

Price Action Trading Strategies Candlestick Patterns

Trading Psychology: Mastering Emotional Control in the Market

Profits of 5 Global Banks High Despite ECB Rate Cut

The Rise of Social Trading and Copy Trading

Technical Analysis 

Technical analysts use charts and other tools to study and analyze the market history and come up with a pattern that may aid them to make a prediction of future activities. But even with the capability to archive past activities and generate patterns from it, past performance is not a guarantee of future results. 

This method looks into the supply and demand surrounding specific security and currency. It is more focused on what actually happens, instead of coming up with an explanation about why something happens. 

One of the basic assumptions of technical analysis is that history has a tendency of repeating itself. 

Currencies move in various directions. If it moves up, it will not stay there forever; we can possibly see it in downtrends or range. Trends can be long or short term, and certainly, it will not march on one direction indefinitely. There will be a frequent encounter of either support or resistance. 

Support and Resistance: A Closer Look 

A currency has reached a support level if it undergoes a difficulty of falling below a specific price. 

This happens most of the time because a currency’s drop in value results in there being more buyers than sellers. With this, the floor is created because traders dive in and snap up purchases. 

On the other hand, a currency has reached a resistance level if it undergoes a difficulty rising above a specific value. It usually happens when the number of sellers exceeds the number of buyers after a currency has experienced a significant increase in price. 

The Reversal of Their Roles 

Even with a better prediction that support and resistance levels provide, the information generated from them is not always confirmed. 

To give you an example, if a currency exceeds past resistance, it can pull the interests of a lot of investors, and as a result, increases its prices. 

On the reversal, other investors might possibly wait for the currency to decrease some value, mainly if it increased in price upon surpassing resistance. With this taking place, investors who hold back could be a fresh new source of support. 

If a currency sinks below support, this situation could be a contributing factor to initiate a bigger sell-off. This situation can happen when a currency reacts to major news on political or economic development. So the old support could become the new resistance as the currency finds it hard to achieve its last price range. 

Highly-Significant Levels 

It is still the classic psychology that plays a major role in an investor’s decisions. These are not entirely because of the outside influences that we can see and hear. It’s more of the investor’s psychology. With this, the global market will frequently create levels of support and resistance largely driven by psychology. 

There is no doubt that support and resistance levels are crucial. By carefully analyzing and identifying these levels, investors can pinpoint the ranges that currencies are trading in and make more accurate transactions. 

Related: 5 Reasons to Start Trading Forex

Anelis May

Anelis May

I love all types of content. Financial news is my specialty though. Full time writer about Financial news, economics, market trends, politics enthusiast and more.

Related Posts

Price Action Trading Strategies Candlestick Patterns

Winning Strategies, price action trading strategies, chart pattern recognition, isk management techniques in forex trading. Mastering forex trading. Introducing Broker Forex Program. A businessperson in a suit holding a glowing blue sphere with the words 'FOREX TRADING' displayed prominently in the center. The background features various financial charts and data screens, symbolizing the digital and analytical nature of forex trading.
by oney
October 29, 2024

Price action strategies offer a streamlined and effective approach to analyzing market movements in the realm of trading. By focusing...

Read more

Trading Psychology: Mastering Emotional Control in the Market

Trading Psychology, Coin to be tree, Short-Term, Invesment Strategies, social trading and copy trading.
by oney
October 24, 2024

Introduction Trading psychology is a critical aspect of successful investing. Controlling emotions such as fear and greed can significantly impact...

Read more

Profits of 5 Global Banks High Despite ECB Rate Cut

central bank policy decisions, profits of global banks
by oney
October 22, 2024

Introduction Despite the recent rate cut by the European Central Bank (ECB), the profits of five major global banks are...

Read more

The Rise of Social Trading and Copy Trading

Trading Psychology, Coin to be tree, Short-Term, Invesment Strategies, social trading and copy trading.
by oney
October 20, 2024

Introduction Social trading and copy trading are revolutionizing the financial markets by connecting traders and allowing them to replicate successful...

Read more
Load More
Next Post

Market Capitalization Represents The Stock Price of A Company

Trending Issues

  • start-up

    5 Facts in the Story of a Start-Up KDrama (Part 1)

    0 shares
    Share 0 Tweet 0
  • Everyone can Make Money while Sleeping!

    0 shares
    Share 0 Tweet 0
  • Malaysian PM to side with China rather than the U.S.

    0 shares
    Share 0 Tweet 0
  • Cristiano Ronaldo and His 6 Successful Businesses

    0 shares
    Share 0 Tweet 0
  • Stock Trading 101: Defining a Stock Index

    0 shares
    Share 0 Tweet 0

Get the latest market news and trading tips to your inbox daily, subscribe now !

Topic

  • Asia News
  • Asia Trade
  • Bonus+Promotions
  • Broker News
  • Business News
  • Cryptocurrency
  • Currency Analysis
  • Finance News
  • Forex & Market
  • Forex Tips
  • Hot News
  • Investment Tips
  • Learn to Trade
  • Market Analysis
  • Politics Issue
  • Reviews
  • Social Media
  • Stock Analysis
  • Stock Market
  • Stock Trading Tips
  • Technical Analysis
  • Tips
  • trading strategy
Go Trading Asia

Go Trading Asia covers the latest in Business and Economic News and Market Analysis, with the aim of Providing Readers with the knowledge and tools to make better informed financial decisions.

  • Contact us
  • Privacy Policy
  • Disclaimer

© 2021 Go Trading Asia.

No Result
View All Result
  • Awards
  • Forex
  • Crypto
  • Stocks
  • Education
  • Broker Directory
  • Contact us

© 2021 Go Trading Asia.

Welcome Back!

Login to your account below

Forgotten Password?

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In