WHAT IS RESISTANCE LEVEL IN FOREX MARKET ?

HOW TO IDENTIFY THE RESISTANCE LEVEL IN FOREX.

                                            

                                        

support and resistance are important level in Forex.

 

 

so when we talk about support and resistance levels it's first of all important to understand that these levels are are things that professional traders use throughout the land so literally all across the globe on trading floors and hedge fund offices you're going to find traders looking at supporting resistance levels regardless of whether they subscribe to fundamental analysis or technical analysis because even if you are a fundamental trader you're still going to want to have some sort of rule for getting into and getting out of your trades you're still going to want to be aware of these levels even if you don't place as much weight on them as technical traders and then if you look at technical traders obviously we're going to be paying attention to them because from a technical perspective that's where we can identify areas of the chart where something's going to happen and that's what we're trying to do as traders we're literally trying to identify areas of the chart where we're going to get a little bit of volatility because volatility is what puts profits in our accounts okay so it's very very important and even you know for people looking at algorithms and high frequency trading and things like that what do you think they're doing they're looking at they're looking at these levels because they know their orders are going to be clustered around these levels so they know that they're going to have the liquidity around these levels to be able to get into and out of the market very very quickly so they are very very important levels and it's something that as i've just demonstrated regardless of the sort of analysis or the sort of approach that you have to trading that you subscribe to you're going to want to understand support and resistance levels so let's jump over to the chart right now and let's look at how we identify them and how we can look to trade them and profit from them so if we take a look here we've got the dollar yen chart but this works for literally any forex pair well any yeah any currency pair any stock any equity any financial chart you know these things even cryptocurrencies the concepts i'm about to show you here will remain the same support and resistance levels work you know they work all over the place and it's something that you really need to pay attention to so first of all let's look at and let's identify what we consider to be a support and resistance level so a support level is an area on the chart like here where the market has traded down and then it's turned around and it's traded away from it okay and that's in what's happened there is that the market has then created a support level so that's an area where the sellers were in control then suddenly the buyers come back into the markets and they push the market higher okay a resistance level is exactly the opposite so a resistance level is an area on the chart where the market has rallied so the buyers have been in control and then they get to a point where the buyers don't really have the um the conviction behind their trades and they either want to take profits or sellers will get involved and they will push the market back down so resistance level think of it like a bit of a ceiling and support level think of it as being a bit of a flaw okay so your support levels are in the bottom so underneath the price action your resistance levels are on top of the price action all right now one thing that you have to remember when you're identifying these levels is that whilst you know if you drop down to a different uh lower time frame then this might look like a resistance level okay so it's going to be relative to the chart that you're trading although i would always say that you're going to put more weight on the support and resistance levels that you get on the higher time frames i these big support and resistance levels over here than you would on these little mini ones on the smaller time frames okay but if you're just looking at one chart so let's say we're trading the daily charts i'm only going to be interested in the big levels these little things here for this particular chart that i'm trading i wouldn't consider this a support or resistance level this is just the price doing what it does which is fluctuating fluctuating fluctuating ebbing and flowing up and down up and down to a point where it does reach a resistance level and then the same on the downside to the point where it does reach a support level okay so these little things here i wouldn't consider these gyrations as support or resistance levels or something that you necessarily want to pay attention to okay so the next thing once we understand how we identify them is well how do we use them and to best demonstrate this i want to zoom out of the chart a little bit and i want to show you how support and resistance levels they interact with each other okay so if we go this is a daily chart and what i'm going to do here is that we can see that the market has sold off all the way down here then we have a big move to the upside right we can see that so what we would do is we would remember as technical traders that the markets they have a memory okay so let me go back to this point in time zoom in again so the markets have a memory so once the market did this i could then put in a support level so horizontal line of supports and then what i can say to myself is that the next time the market gets to that level i'm expecting something to happen for the most part if it's been a while since it's been at that level i'm going to expect some sort of a bounce it might be it might not be a big bounce it might be a temporary bounce but i'm going to expect something to happen at that level so you know for the press to essentially potentially come down like so and then push off a bit it might break down eventually but i don't think that it's going to do it without any sort of support to start with so then what we do is we have it on our charts there and then we wait until the market gets down to the level and sure .

Look at the picture below.

the three black circle represent the resistance level of the market the red line is show the strong resistance level of the market because when market touch the level seller are push back the market. when market touch the resistance level seller are push the market back resistance are the level of seller.

and when market touch the support level market back to up said and support is the level of buyers when market reached the support level buyers are take control in the market. i hope you are understand the support and resistance level with the help of this article.