SUPPORT AND RESISTANCE LEVEL

Support and Resistance is a trading concept which interprete whether the market is currently in doubt and probably will have a direction change. A price level, at which this market situation occur, is called as Support or Resistance level. We expect or predict that on this level market will change its direction.

Traders have many different way to determine Support and Resistance level. To mention some of the most popular : using recent price motion, using pivot point formula and using fibonaci lines.

In this article I’m going to write only about the technique using recent price motion. I will write the Fibonacci technique on separate article. There are already 3 articles I wrote explaining pivot lines, pivot point and also pivot point calculator, a free forex tools to help you calculate pivot point.

Determining Support and Resistance Using Recent Price Motion

In this technique Support is determined as a price level at which market seems to having difficulty to go lower. In the contrary, Resistance is a price level at which market seems to having difficulty to go higher.


The difficulty to break certain level is indicated by several unsuccessful trials to go lower or higher than that level. Agressive trader probably use only 2 unsuccessful trials, while conservative traders use 3 or more unsuccessful before they notice a support or resistance level. Many traders believe that the more often price tests a level of support or resistance without breaking it, the stronger the area of resistance or support is.

If a level of support is broken, it usually become the next resistance. In the contrary, if a level of resistance is broken, it usually become the next support