For beginners, traders often get confused in determining entry points and exit points. Determining a good strategy is an obligation for traders to be able to seize profit opportunities. Therefore, you should be familiar with the area of support and resistance analysis that you can find in candlestick chart patterns. According to Trading View, support and resistance is one of the easiest techniques in technical analysis based on a concept but difficult to master.
Support is the price level at which buying is expected. While resistance is the resistance level and the selling level of a product.
Let’s look at some of the Support and Resistance analysis objectives:
Assist traders in taking action
The S/R level shows price movements and market fluctuations. Like the reversal of the price (bounce), which means the price will be stable or even there will be price continuation (break). Thus, traders can determine when to determine entry and exit points in market conditions that have the opportunity to get profit.
Identifies when trend reversals occur
Support and resistance analysis areas have the same weight. Additionally, it is useful for identifying the initial direction of a buying trend at a support level.
From a series of several support levels, you find that an uptrend is taking place. It means that price reversals will still occur before creating new highs. While a series of resistance levels means that there is a downtrend, meaning that price reversals will still occur before creating new lows.
Knowing supply & demand in the forex market
When supply exceeds demand, the price will move up to touch the resistance level. You have a profit opportunity by selling because later prices will fall. It will be vice versa when demand exceeds supply, prices will move down to touch the support level. There is a profit opportunity by buying because later prices will be rise.
There is no Enduring Support & Resistance
The starting point of support and resistance is a level that the trader expect to be able to hold the rate of price movement but is not the final determinant. Resistance levels that continue to rise will turn into support, so even for support levels that continue to move down can turn into resistance. After this role shift occurs, you should wait for confirmation of a break of the S / R level for a potential continuation of the trend.
