What is Forex Support and Resistance?
Kicking off my trading course, we're going to start by going over what is support and resistance.
We'll then discuss how to identify key levels. Both required skills before we can talk about actually trading around them.
What is support and resistance?
Support/resistance zones are areas of price that are used to show where buyers and sellers have been in the past.
They're often characterised by past bottoms (support) and tops (resistance), but put simply, support/resistance is a price we've seen a reaction from in the past.
They say a picture can tell a thousand words, well take a look at the following:
As you can see from the above example, support is nothing more than a bottom in the market and resistance a top.
These bottoms and tops could be short or long term. The only thing that matters is that price has bounced off the zone sometime in the past.
Because humans are creatures of habit, when price returns to a support or resistance zone, you're likely to see a reaction.
Forex support and resistance zones certainly aren't a guarantee that price will act as an impenetrable brick wall.
But they are areas where you're likely to see a reaction and therefore they help put the odds that little bit further in our favour.
If you have any questions around what is forex support and resistance, then leave a comment below and I'll be happy to have a chat.
Best of probabilities to you,
Dane.
FOREX BROKR | LeoFinance Blog
Daily market analysis and education.