Support and Resistance is one of the most frequently used Forex trading techniques by novice and professional traders in technical analysis. There are several ways to quickly determine support and resistance that you can apply in Forex trading. For example, you can determine support and resistance with simple indicators or other methods.
What is Support & Resistance?
In price movements, support is the lowest point or area that cannot be penetrated by downward price movements, while resistance is a point or height that cannot be penetrated by upward price movements. Both of these terms are used to designate price levels on charts that act as markers of price movements that do not penetrate a certain value.
Basically, Support and Resistance aim to find out the right area when taking a buy or sell position and determine targets for price movements.
While the support area is generally an area used as a reference for looking for buy positions, while the resistance area is used as a reference for looking for sell positions.
How to determine the correct support and resistance
You need to know that support and resistance are not sufficiently understood in theory, but you need to take advantage of the help of technical indicators or certain price movement mapping methods. The following is an example of a price movement mapping method to determine the correct support and resistance in Forex trading.
1. The highest point or lowest point
The highest point (top) or lowest point (bottom) is a very simple method for determining support & resistance in trading. For more details, you can see the following image below:
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| SUPPORT AND RESISTANCE |
In the image above, as you can see, the image shows price movements using candlesticks. Candlestick is a method for mapping and reading price movements in a forex trade.
2. Trendlines
The trendline is a method that can be used to determine support and resistance in trading. However, before implementing this method, of course, you have to identify the trend first by combining at least two trough points during an uptrend and combining at least two peaks during an uptrend. If the price approaches the trendline, then the opportunity for the area to open becomes a resistance or support area as shown below.
Those are the two easiest ways to determine support and resistance in Forex trading. There are many ways you can determine support and resistance levels in the market.
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