Support and resistance is a powerful pillar in trading and most strategies have some type of support/resistance analysis built into them. Support and resistance tends to develop around key areas that price has regularly approached and rebounded thereafter. This article explains what support and resistance is and covers top support and resistance trading strategies.in the financial markets.
Resistance is the price level at which supply is strong enough to prevent the price from rising further. The rationale behind this is that as the price gets closer and closer to resistance, and becomes more expensive in the process, sellers are more likely to sell and buyers become less likely to buy. In that scenario, supply will overcome demand and that will prohibit price from going above resistance.
It is clear to see that price has not always respected the bounds of support and resistance which is why traders should consider setting2) Breakout strategy In the below scenario, traders should wait for the market to continue moving down, after the pullback, before looking for entry points.strategy utilizes the trendline as either support or resistance. Simply draw a line connecting two or more highs in a downtrend, or two or more lows in an uptrend. In a strong trend, price will bounce off the trendline and continue to move in the direction of the trend.
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