Hello trading lovers, for all those who are looking for a way to earn a living in trading, this article must be kept in mind and fully understood. I am going to talk about Support and Resistance.
We have all ever hated talking about support and resistance. They won't make sense to us at first, but they are a fundamental part of any trading plan.
The supports and resistances are places where the price stops and performs with a movement in the opposite direction to the one it was making. The difference between supports and resistances is the type of movement that the price makes, but they are based on the same idea.
Support: The price stops going down and starts going up.
Resistance: The price stops rising and starts falling.
If a price has reached a certain price many times and has made a U-turn, in these cases we can mark support or resistance. With what predicting the future price will be easier.
Many professional traders use these support and resistance as entry points for their trades. It is a very widespread technique and in many cases it usually gives acceptable results. Of course, sometimes trend changes occur and these points are broken.
Which of the two is more important? Good question and difficult answer.
Both are equally important. But there is a situation in which we will give more value to one to the detriment of the other. If we are in an uptrend we should give more importance to support. A break of said support can indicate a possible change in trend. And if we are in a downtrend we must give more importance to resistance.
A support break is when the price drops below that point. It must be taken into account that the supports are always approximate, many times, even if the price falls a little below that point, it does not mean that there is a change in trend. The breakout of resistance is when the price rises above said point. They have the same characteristic as the supports, they are approximate, if the price rises a little it does not indicate that the resistance has been broken.
In the image we can see green supports and red resistance. As you can see, the resistances have been respected, but the last support has been broken and produced a change in trend.
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