SUPPORT AND RESISTANCE LEVELS!
I have promised you that I will create educational post about major support and resistance levels and other tricks and tips in trading.
So let’s dive in 😎
🔸Support (green on pic1) is the point at which demand prevents a stock from declining further. Each time the price reaches this level, it struggles to drop below it, as buyers become more interested in purchasing while sellers are less willing to sell.
🔸Resistance (red on pic1), on the other hand, is where supply halts a stock from rising further. When the price reaches this level, it faces difficulty moving higher, as sellers become more inclined to sell and buyers are less eager to buy.
🔸A key concept of technical analysis is that when a resistance or support level is broken, its role is reversed. If the price falls below a support level, that level will become resistance. If the price rises above a resistance level, it will often become support.
🔸How trade?
You can trade breakouts of support and resistance levels with help of traded volumes:
1. Identify resistance.
2. Check volume (higher volume = more reliable breakout).
3. Enter trade when price breaks resistance and there's high volume.
4. Set stop-loss below breakout level and take-profit target at a higher resistance level.
5. Monitor trade and adjust stop-loss and take-profit levels if needed.
That’s all folks😎
Write in the comments how you trade support/resistance levels? 👇🏻👇🏻👇🏻