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Support and Resistance

Technical analysts use support and resistance levels to identify price points where trends are likely to pause or reverse. Support levels indicate where there is surplus demand from buyers, while resistance levels indicate surplus supply from sellers. These levels can be identified on charts and used to determine potential entry or exit points. Traders can look for bounces off support/resistance levels or enter aggressively when prices break through, or more conservatively after a pullback to the broken level. Candlestick charts also help visualize how prices interact with identified support and resistance zones.

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Justin Lim
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633 views19 pages

Support and Resistance

Technical analysts use support and resistance levels to identify price points where trends are likely to pause or reverse. Support levels indicate where there is surplus demand from buyers, while resistance levels indicate surplus supply from sellers. These levels can be identified on charts and used to determine potential entry or exit points. Traders can look for bounces off support/resistance levels or enter aggressively when prices break through, or more conservatively after a pullback to the broken level. Candlestick charts also help visualize how prices interact with identified support and resistance zones.

Uploaded by

Justin Lim
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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SUPPORT AND RESISTANCE

SUPPORT AND RESISTANCE

RESISTANCE (CEILING)
Resistance levels indicate where there will be a surplus
of sellers. Arise due to selling interest when prices have
increased.
SUPPORT (FLOOR)
Support levels indicate where there will be a surplus of
buyers. Support is a price level where a downtrend can
be expected to pause due to a concentration of
demand or buying interest.
SUPPORT AND RESISTANCE

Let us look at the basic first:


SUPPORT AND RESISTANCE

• Technical analysts use support and resistance levels


to identify price points on a chart where the
probabilities favor a pause or reversal of a prevailing
trend.
• Once an area or "zone" of support or resistance has
been identified, those price levels can serve as
potential entry or exit points.
• Support and resistance areas can be identified on
charts using trendlines and moving averages.
SUPPORT AND RESISTANCE

PLOTTING SUPPORT AND RESISTANCE


Plot support and resistance on a line chart rather than
a candlestick chart.
The reason is that line charts only show you the closing
price while candlesticks add the extreme highs and
lows to the picture.
When plotting support and resistance, you don’t want
the reflexes of the market. You only want to plot
its intentional movements.
SUPPORT AND RESISTANCE

PLOTTING SUPPORT AND RESISTANCE


SUPPORT AND RESISTANCE

HOW TO TRADE SUPPORT AND RESISTANCE?


1. BOUNCE
One method of trading support and resistance levels is
right after the bounce.
SUPPORT AND RESISTANCE

HOW TO TRADE SUPPORT AND RESISTANCE?


2. BREAK
There are two ways in trading breaks in Forex:
 The AGGRESSIVE WAY
 The CONSERVATIVE WAY
THE AGGRESSIVE WAY
Buy or sell whenever price passes through a support or
resistance zone.
SUPPORT AND RESISTANCE

HOW TO TRADE SUPPORT AND RESISTANCE?


THE AGGRESSIVE WAY
SUPPORT AND RESISTANCE

HOW TO TRADE SUPPORT AND RESISTANCE?


THE CONSERVATIVE WAY
Instead of entering right on the break, wait for the price
to make a “pullback” to the broken support or
resistance level, and enter after the price bounces.
SUPPORT AND RESISTANCE

CANDLESTICKS with SUPPORT & RESISTANCE


SUPPORT AND RESISTANCE

CANDLESTICKS with SUPPORT & RESISTANCE


SUPPORT AND RESISTANCE

CANDLESTICKS with SUPPORT & RESISTANCE


SUPPORT AND RESISTANCE

CANDLESTICKS with SUPPORT & RESISTANCE


SUPPORT AND RESISTANCE

KEY TAKEAWAYS:
• Support and Resistance is a ZONE not just a SOLID
LINE.
• One way to help you find these zones is to plot
support and resistance on a line chart rather than a
candlestick chart.
• It prevents the price of an underlying asset from
moving in a certain direction.
SUPPORT AND RESISTANCE

KEY TAKEAWAYS:
• When price passes through a resistance level,
that resistance could potentially become support.
SUPPORT AND RESISTANCE

KEY TAKEAWAYS:
• If a support level is broken, it could potentially
become a resistance level.
DISCUSSION
END

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