Resistance and Support how to look for them on a graph
The basic meaning behind Resistance is when there are more SELLERS then BUYERS.
The basic meaning behind Support is when there are more BUYERS then sellers.
This may seem like a simple skill but for me its an invaluable one there have been times when i completely forgot about resistance and support and sat there staring at the screen wondering what happened.I will detail below how i define a strong support or resistance level and the best practice for this is to draw a line on your graph to help you see when its getting closer or further away from one point to another.The best thing about this is when you are able to see resistance and support levels it takes the element of surprise away and you will see that after some time you will come to expect the market to do what it does at that level cause you already saw it coming.
The basic meaning behind Support is when there are more BUYERS then sellers.
This may seem like a simple skill but for me its an invaluable one there have been times when i completely forgot about resistance and support and sat there staring at the screen wondering what happened.I will detail below how i define a strong support or resistance level and the best practice for this is to draw a line on your graph to help you see when its getting closer or further away from one point to another.The best thing about this is when you are able to see resistance and support levels it takes the element of surprise away and you will see that after some time you will come to expect the market to do what it does at that level cause you already saw it coming.
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Please ignore the white line across thats just the current price.
Ok what defines a strong resistance or support line is when there is a big move in the other direction.To the left you can clearly see the market making an upwards run before it came into an area where there are sellers waiting to push it back.Think of it as a game where there are 2 sides Buyers VS Sellers if a line was drawn right down the middle and both of them shared an equal amount of the market no on would earn any money.Money is earned when you buy in at a low point and sell at a high point, example its the same as going out to buy apples you bought them at a price of 1 apple for $1.When you reach home your friend suddenly needs to eat and apple so you sell it to him at $1.50.From there you would have earned $0.50.The market is all about supply and demand without each other there will not be movement as a trader your job is to find the correct move and correctly catch it so you earn from it.
The market will never stay still cause there is always a war going on between both buyers and sellers but there are times when one side exceeds the other and it causes the market to go the other way.The best way to spot a resistance or support level is when a big move is made in the other direction.Please also note that once a line is crossed and the movement in that direction is strong , resistance turns to support.
To explain what i mean its basically like in war those lines are trenches if your a buyer you will want to advance to another higher and better position.Sellers are the enemy and they are trying to push you back so they have lines as well.When you win over a resistance all your troops will be rushing to get there and to hold the new line.Thats when a resistance line has been taken it turns to support.
Ok what defines a strong resistance or support line is when there is a big move in the other direction.To the left you can clearly see the market making an upwards run before it came into an area where there are sellers waiting to push it back.Think of it as a game where there are 2 sides Buyers VS Sellers if a line was drawn right down the middle and both of them shared an equal amount of the market no on would earn any money.Money is earned when you buy in at a low point and sell at a high point, example its the same as going out to buy apples you bought them at a price of 1 apple for $1.When you reach home your friend suddenly needs to eat and apple so you sell it to him at $1.50.From there you would have earned $0.50.The market is all about supply and demand without each other there will not be movement as a trader your job is to find the correct move and correctly catch it so you earn from it.
The market will never stay still cause there is always a war going on between both buyers and sellers but there are times when one side exceeds the other and it causes the market to go the other way.The best way to spot a resistance or support level is when a big move is made in the other direction.Please also note that once a line is crossed and the movement in that direction is strong , resistance turns to support.
To explain what i mean its basically like in war those lines are trenches if your a buyer you will want to advance to another higher and better position.Sellers are the enemy and they are trying to push you back so they have lines as well.When you win over a resistance all your troops will be rushing to get there and to hold the new line.Thats when a resistance line has been taken it turns to support.
I know there are traders that buy off the support line and sell of resistance line this works but there are times when you get caught off guard and you most likely will get burned if your stop limits were just above or below that line.The question i have always asked but never found the answer to is.How do you know when a resistance or support line will hold? If anyone is attending a seminar and has gotten a straight forward answer to that please let me know cause so far i have only been given round about answers.The answer that i have come to is more complex and i will go into that on a later stage.For now this basics have to be ingrain so its 2nd nature and your mind can work all this out without using more then 3 seconds before more complex factors come into play.
So to sum it all up Resistance and support lines are seen and noted when the market goes to that point and swings the other way in a very strong fashion.Lines are nothing more then a convergence of buyers and sellers .After the battle is fought out and the winner is decided resistance or support can change in favor of the winning side.
I could go into Fibonacci but im not an expert in that at the same time i find that for my kind of trading by the time the correct graph is up the move is already over.So i dont think i will cover that if there are any experts on Fibo that wish to contribute to the site please feel free to let me know.
So to sum it all up Resistance and support lines are seen and noted when the market goes to that point and swings the other way in a very strong fashion.Lines are nothing more then a convergence of buyers and sellers .After the battle is fought out and the winner is decided resistance or support can change in favor of the winning side.
I could go into Fibonacci but im not an expert in that at the same time i find that for my kind of trading by the time the correct graph is up the move is already over.So i dont think i will cover that if there are any experts on Fibo that wish to contribute to the site please feel free to let me know.
