What is resistance level and support level in forex trading? -

Please explain. Great question and you are on to one of the keys in technical trading. I like to think of it this way. Resistance is like a ceiling and support is like a floor.. Many times price will go up to that ceiling or resistance level and can t seem to go any further. It will then retreat back down and test the resistance level again at a later time. Each time that price hits that resistance level and retreats it creates what is known as a top. If it does it twice it is a double top. If it tests resistance three times it is known as a triple top. The same thing happens when price goes down and tests support levels. Double bottoms and triple bottoms. The thing that is very cool is each time price tests resistance or support and moves away it may be building up some potential energy. So when you see price test a support level three, four or more times it may be getting ready to blast thru. Keep your eyes open for those double and triple tops (and bottoms). Alot of times you will find support and resistance occurs at what are known as psychological levels. Numbers such as 1.2000 and 1.3500 etc. These are easy numbers to remember and tend to be the points where alot of people and automated programs place buy or sell orders. The issue with support and resistance levels, as well as other indicators is that it still takes a bit of a quot;guessquot;, although an educated guess, at what is going to happen next. Personally, I no longer like to quot;guessquot;. I am currently coaching my clients on long term Forex investment strategies that utilize a thing called hedging. We don t care if the price of a currency pair goes up or down. We still make a very good monthly return. I hope this gives you a little to think about. May all your guesses be good ones. Paul Simply send me your email address. My address is pupp52@yahoo.com Report Abuse Over time levels are reached where buyers and sellers have large positions.Usually this is determined by moving averages and other indicators. http://www.fxtraderschat.com tats a sickening trade Support level is a level that prices stops falling like a stone. There could be and there are support levels with varying strength. Some charts label them as S1 S2 S3.. Resistance level is the opposite its a level where prices just refuse to rise anymore. The buyers had enough and the sellers decides to take profit. Again there are many levels of resistance R1 R2 R3 So when you are placing your stop you can truncate your position bythese various levels Forex trades in ranges, a foreign exchange never goes to zero, and never goes astronomically high. They trade in a narrow range. The top of the range is a resistance level where there will tend to be more sellers than buyers at that level. The lower end of the range is the support level, where there will tend to be more buyers than sellers.