Support and Resistance.

Technical analysts employ support and resistance levels as fundamental ideas that underpin a broad range of tools for their work.

In simple words, traders get a brief idea of the market from support and resistance. Also, support and resistance play a major role in technical analysis.

Support:

Taking help with an image I will show you what exactly support looks like.

Now this is the support area and it says when the price reaches the support area the price rises. And you can see how the price is rising after reaching the support area.

Resistance:

The Opposite goes for resistance, which means the price will fall back after touching the resistance area.

Why support and resistance is important:

Now, what is the importance of support and resistance for traders?

As already mentioned above support and resistance are a part of technical analysis which is again a very important part of successful trading. These levels are very crucial to know the price movement.

Strategies for support and Resistance:

Coming to the strategy part you can use both support and resistance to make strategies for yourself. It also depends on how you use these levels in your setup.

Here are some of them that can give you good returns:

1-Breakout strategy- You can use this method to wait for that specific level’s breakout. This means, that you can wait for that support or resistance level to break and then go for taking a trade. This strategy is often used by many.

2-Range strategy- After drawing both the levels you can for the range strategy, this strategy is used in a sideways market too because of its accuracy.

After marking both support and resistance you can trade with the help of this strategy.

Management with support and resistance:

Now how you can manage trade with the help of support and resistance.

1- You can determine the profit levels easily as support and resistance levels can help you easily.

2- You can use these levels as a stop-loss to decrease your losses if you are trading within the support and resistance range.

3- By determining the price range you can choose the size of your position easily.

4- A major help in taking trades on a sideways market.

Conclusion:

Overall support and resistance are the base of all strategies, every technical analyst will first have a look at both the support and resistance levels. No matter the level have major support and resistance, or minor support and resistance.

If you are a beginner I will suggest you start with strategies including both support and resistance levels. This can help you easily manage your profits.

Are You Prepared to Take Control of Your Future?