You will increase your trading profitability if you can accurately identify levels of support and resistance - areas where prices may stop and turn around in the future.
Knowing where a currency pair may stop and turn around helps you enter and exit your trades at the most profitable times.
Support is a price level at which a currency pair tends to stop moving down and then turns around and starts moving back up.
Resistance is a price level at which a currency pair tends to stop moving up and then turns around and starts moving back down.
Support and resistance levels are not precise price points. Rather, they are general price ranges. Give your support and resistance levels some room to be flexible.
Support and resistance levels come in varying forms. To become a successful forex investor, you will need to learn to recognise the following forms of support and resistance:
Horizontal Support and Resistance
Horizontal support and resistance levels are perhaps the easiest levels to identify.
As you look at the charts of the currency pairs you are interested in trading, you will begin to notice that the currency pairs will often rise and fall to the same price levels before turning around and moving back in the opposite direction.
These price levels are horizontal support and resistance levels as shown in the chart below:
Once you feel comfortable identifying horizontal levels of support and resistance, you can move on to diagonal levels of support and resistance.
Diagonal Support and Resistance
Diagonal support and resistance levels can be more difficult to identify when you are just getting started.
However, diagonal support and resistance levels are usually the most important levels when you are analyzing a currency pair that is trending.
Remember, you want to find trending currency pairs because it is much easier to make profitable trades when a currency pair is trending.
As you look at the charts of the currency pairs you are interested in trading, you will begin to notice that the currency pairs will often rise and fall in a stair-step patterns.
These patterns form higher highs and higher lows or lower highs and lower lows.
As shown in the chart below, the lines that connect these highs and lows are your diagonal support and resistance levels.
The real trick to effectively investing using support and resistance levels is to combine both horizontal and diagonal levels in your analysis.
Your currency charts have a wealth of information locked within them, and they are waiting for you to unlock that information with simple, but effective, technical analysis techniques.
Wishing all best of luck in forex trading business.
Visit the links below to open your trading account today and start practicing all that you have learn.
1. www.agea.com/?gid=53541
2. www.instaforex.com/en/index.php?x=LGYM
God bless!
No comments:
Post a Comment