Now you know how to spot a trend, where to look for the emergence of a powerful movement, but of course there are new questions:
- Seen as possible targets trend?
- Whether the levels from which the price can push in the opposite direction?
The answer to these questions will provide the levels of "support" and "resistance"
What is the level of "support" and "resistance"?
Levels of "support" and "resistance" - it levels where changing distribution of buyers and sellers.
Recall the law of supply and demand:
- If the demand (willing and able to buy) more offers (the desire and ability to sell), the price increases
- If supply exceeds demand, the price falls
Simply put, the level of "support" and "resistance" - these are levels where the focus order of major market participants.
Resistance - located above the price level
Support - located below the price level
Why working levels of "support" and "resistance"
How strange it would seem, but the levels of "support" and "resistance" work, because we know about them!
Agree, why would the price suddenly react to some lines in the chart?
On these lines react exactly traders themselves.
Of course, what the reaction will depend on many factors: the news, waiting for change of trend, etc.
When the price to a certain level of "support" and "resistance," the trader takes one of the following decisions:
- To close the opening of the transaction, or risk (because the price can bounce level in reverse)
- Open trade in the opposite direction, hoping to get the most favorable entry and increase the possible earnings
- Wait for the reaction rates at this level, and only then decide what to do.
Basic principles of the levels of "support" and "resistance"
- Price moves from one level of "support" and "resistance" to the other
- Try one level, the price tends to go to another
- The longer formed the level of "support" and "resistance", the more valuable it becomes
- After the true penetration levels of "support" and "resistance" they change places, "support" is the "resistance", "resistance" - "support"
Levels of "support" and "resistance" in the trading system Masterforex-V
The trading system Masterforex-V is great importance in the synthesis of different approaches to determining the level of "support" and "resistance"
- The historical highs and lows
- Pivots MF
- MF sloping channel
- The basis of wave patterns
- Fibonacci
- Orders OANDA
etc.
The basic postulate of the financial markets, there are many approaches decision-making - the most important is the level where these solutions agree.
- you will be able to distinguish the origin of the momentum from continuing flat market
- you get the most practical approach to the definition of the end of correction, and thus the entry point at the beginning of the pulse
- you will be able to evaluate the potential of the forthcoming movement, and therefore correctly identify the level of profit-taking
- you will see a cluster of levels of "support" and "resistance" of the various trade campaigns, and thus be able to assess their relevance for decision-making
Read more:
If you are familiar with these concepts - safely move to the next class: Elliott Wave Theory
