
Breaking down the Charts with Support & Resistance
MaximumLots Posted 9 June in #Technical analysis #Support And Resistance #How To TradeFirst I'll start with some definitions.
Support
This is a level that we expect price to reach but not break beyond. Notice I said "break" and not "close". Price can close beyond support and the level remain intact. I will explain in more detail later. Essentially support acts as the floor for price and when price reaches it, we do not expect it to move much lower if it holds. We look to buy at support.
Resistance
If support is the floor then resistance is the ceiling. We expect price to reach this level but not break higher. We would look to sell from resistance.
Finding The Levels
Much like supply and demand which I've written about before, we are looking to trade away from support and resistance. We only want to trade the best setups so that means learning to identify major support and resistance levels. Minor support and resistance levels will still often produce a reaction but to have the odds in our favour as much a…