Trading course series - #8 - Support and resistance

crypsteem (56)in #cryptocurrency • 4 years ago (edited)

Support and resistance are the most important and the most vital thing in trading. If you are trading, you must know what support and resistance are and you must know how to use it. Today in this post we are going to discuss about support and resistance.

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What is support and resistance?

Support is where the price is bouncing from after a down trend and continuing up. Support can be a straight horizontal line or angled horizontal line or even a curved line in some cases. Support forms when we connect lows of the market and we can expect market to bounce from the same trend of support next time, which is called the trend line.

Resistance is formed when we connect higher highs. Price mostly bounce and continues down from resistance.

How is support and resistance formed?

Support and resistance is formed because there are some price where traders trade more than other price. It will form horizontal support line. If price is going up, price moves by making higher lows and we can connect those lows to predict another low and as many traders use it there is higher probability that price will bounce from that point and same is the case for resistance.

You can practice to spot support and resistance clearly and it will be one of the best skills you will learn as a trader. Support and resistance at a point can act relevant even after years or decades.