In the Forex market, you will find many important factors and terms that you must learn. You won’t be able to trade profitably if you don’t understand and learn the use of those factors and terms. If you are new in the market, make sure you pay attention to every aspect that is present in the Forex market. Unless you have a strong foundation of knowledge about the trading business, it will be really hard to make a profit. Most of the time, naïve UK traders start trading without having basic knowledge. Eventually, they lose a big portion of their investment. You need to have a strong understanding of the basic terms or else it will be tough to survive in this industry.
From all the terms the support and resistance are widely used concepts by the traders. But to use them in the market you have to learn the proper processes. There are even many traders who don’t have any idea how they should analyze the support and resistance in the market. Thus, they lose their trades.
What is support in the Forex Market?
When an asset falls to a certain point, the buyers again gain back control of the market, it is known as a support point. You can simply visualize the support level by drawing a line connecting the lower lows and you can also visualize the support level by using different technical indicators. To find a valid support level, you need to connect a minimum of three lowers lows or significant points in the market. Make sure you do it in the higher time frame or else you get minor support levels. Remember the fact that the support point is a place where the price of a certain asset starts rallying higher.
A support level is known as the core of fundamental analysis, traders try to find the support level to make a price plan for their entry and exit points. To understand the support level accurately, you need to learn about the market and practice in it.
What is resistance in the Forex Market?
A resistance level occurs in the market when the price level stops rising, changes its direction and begins to fall. You can visualize the resistance level by simply drawing a line connecting the highs point and you can also visualize a resistance level by using different indicators. Make sure you use the premium platform offered by the reputed broker like this or else it will be tough to find the critical resistance level with a high level of accuracy. With the help of premium tools, you can get a better picture of the market.
You can give a more dynamic view to the resistance level by applying trend lines to the chart, like the support level the resistance level is also an important core in technical analysis. If new information comes to the market and it moves towards an asset then the resistance levels can be short-lived.
How to plot support and resistance
You need to know that the support and resistance levels are not exact numbers, rather they are zones. Many traders find it very difficult to plot the support and resistance levels since they don’t have precise knowledge of the key swings of the market. You need to have enough knowledge and skills to draw support and resistance.
Most of the time, the market tries to test the traders by making appear that the levels should be broken so that the traders fail to draw the exact support and resistance point. As the market oscillates over time, the support and resistance levels are being formed continuously. You need to put give time into the market and work with patients so that you can plan an accurate support or resistance level.
Conclusion
You need to observe the chart very carefully to draw the support and resistance level precisely, you can’t draw the levels without having enough skills. Even the pro traders sometimes fail to spot accurate support and resistance levels but it’s not that hard. You can definitely spot the potential support and resistance areas in the market with proper practice.