Important Secrets in Technical Analysis

Support and Resistance Areas: They are like a map guiding you during trading.

1. What are supports and resistances?

- Support: A price area that may prevent further declines, where buyers show up strongly.

- Resistance: A price area that may stop an increase, as selling pressure increases at that point.

2. How do you identify them on the chart?

- Look for areas where the price has bounced multiple times before.

- Support is often at a previous low.

- Resistance is often at a previous high.

3. How do you use them in your trading?

- When approaching support: Watch for reversal signals like reversal candles or increased trading volume, and consider buying.

- When approaching resistance: If signs of weakness appear, it may be the right time to sell or take profits.

- Breaking support: A signal of a potential continuation of the decline (a selling opportunity or opening a Short position).

- Breaking resistance: A potential continuation of the rise (a buying opportunity or opening a Long position).

4. When does their importance increase?

- In a sideways trend: Support and resistance areas are stronger, as the price moves between them.

- With confirmation: Do not rely solely on the price level, but also watch for trading volume and candlestick patterns.

Professional Tip:

Supports and resistances are areas, not exact numbers!

Sometimes the price may slightly breach the area and then return, so do not expect a reversal at an exact number.