Technical analysis basics: Understanding support and resistance

Julie Brownlee, Fsp Invest, 20 Aug. 2015

Tags: technical analysis, support, resistance, support levels, resistance levels, trading,



If you want to use technical analysis to help you find trades, there are a few key concepts that you need to understand first.

The most important of these is support and resistance. These crucial levels form the basis of so many technical analysis tools.

So what exactly is support and resistance?

Read on to find out…



Using charts as part of technical analysis


Charts are an integral part of technical analysis. Technical analysts believe price charts show everything you need to know about trading a share, commodity or other asset.

This is because technical analysis relies on history repeating itself. It may not do this exactly, but a price can follow the same or a similar pattern as it has before.

Technical analysts use historical price charts to predict where the price of an asset is going. They enter and exit trades based on this.


Where support and resistance come in


Whichever price chart you look at, you’ll notice the price jumps up and down as it progresses.

When a price makes a high and falls back, this is a resistance level. When a price hits a low and rises, this is a support level.

Have a look at the chart below showing these key levels…


Chart showing support and resistance levels


These levels of support and resistance become significant levels in the market, Frank Hemsley in Profit Watch explains. When the price comes back to these levels in the future, it tends to meet resistance.

You can use this information when you trade and it will help you make money from the market.

So there you have it. Understanding support and resistance.

*********** Advertisement ************

What YOU missed at Timon Rossolimos' Forex 101 Workshop

"I feel blessed to come to this seminar and I would like to be included in every seminar" - Mothofeela Lekeno
 
"Everything was explained clearly and to the point. Well done!" - Neerash Lutchmen (Durban)
 
"I now know where to start and which platforms to use. Everything was very informative ad most of all I got a strategy to use for FREE." - Simphiwe Mashinini


If you want to see what these new Forex traders are on about, click here

***********************************


Related QA

Pic
lenita.fourie777 asked:
I have lost PLENTY in Binary companies. I have lots of dept. I only have R 5 000 available now to try and make up some losses. If everything goes [read more]
Published at 23 Feb. 2018 in: Trading 1 Answer
Pic
joe9976 asked:
I have bought the South African Investor Crypto Wealth Package so that I can start investing in Bitcoin. Sam Volkering recommended opening an account [read more]
Published at 23 Feb. 2018 in: Trading E-mail 1 Answer
Pic
deongt asked:
Hi Timon. I am currently subscibed to Rhst and have a broker acount with Gt247. I,m thinking of subscribing to Pick pocket trader. Can I use the same [read more]
Published at 21 Feb. 2018 in: Trading 1 Answer
Pic
emmamaya020 asked:
Hi Timon, I am directing this question to you out of great concern from within. I recently subscribed to RST tips for making extra profit and on [read more]
Published at 21 Feb. 2018 in: Trading Trading tips 1 Answer
Pic
e7469 asked:
I already have an active old trading account with GT247, can I use this account? It was not 1 of the 2 brokers you recommended. Sue Neumann [read more]
Published at 20 Feb. 2018 in: Trading Broker firms 1 Answer

Related articles:


Latest:

Comments
0 comments



 
 


Youtube Twitter Facebook

Connect with us:    

POPULAR TOPICS
  • Accelerated Investor
  • Accessories
  • Accountancy
  • Accountancy services
  • Accounting