The technical trader (technicalist) will usually focus on the levels of resistance and support before starting the analysis with specific indicators. Support and resistance levels can change at any time, therefore traders, especially newbies, could spend long hours just to determine the levels of resistance and support for later mapped on the chart.
What is the actual level of support and resistance level, and are difficult to determine these levels?
Support and resistance relate to the level of supply and demand in the market. On the support level market participants generally consider that the price is too cheap, and it predicts demand will exceed the supply until the price drop is happening will cease. Otherwise on resistance level market participants consider the price too expensive and predict demand will be reduced.
The request can also be interpreted as bullish or buy. At a time when the price reaches the level of support action buy will increase and prices will rise. Otherwise on resistance level market participants consider the price too expensive and predict demand will be reduced. When the price reaches the level of resistance, the pressure to sell or supply will increase and prices will fall and could be interpreted as bearish or sell.
If the support level is successfully bypassed or compromised means that market participants consider level price is still quite expensive to purchase, then the level will become a new resistance level. Conversely, if impenetrable resistance level means that market participants consider the price is still too cheap for a detachable (sold), then the resistance level will be a new support level. So after long resistance, penetrated into new support, and vice versa.
In trading, always pay attention to constituents
In the circumstances of the actual market levels of support and resistance levels are always going to be repetitive. The longer and the more often the levels ' visited ', it will be increasingly strong support or resistance. If in the future the price move is approaching that level again, then the level of support or resistance of the old can be considered as one of the factors supporting the validity of the price movement. The stronger level of support or resistance for long then it will be more valid as supporting factors for the confirmation of the new level. Other supporting factors such as trend lines, channel trends and Fibonacci retracement level.
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