❓ What are support and resistance levels
💎 Levels are conditional lines drawn on the chart.
👨💻 They are formed in places of "struggle" of supply and demand, when market participants show interest in a certain price and intensify sales or purchases when approaching it.
👁 On a chart, this creates peaks and troughs through which you can draw a line. At the same time, the greater the number of line touches, the stronger the detected level.
👉 There are two types of levels:
1️⃣ support - is built on two or more lows;
2️⃣ resistance is drawn by two or more maximums.
➿ Use different ways to find lines. Some draw them by extremums, others by opening and closing points.
✅ Therefore, it is commonly believed that the level is not a specific figure, but a narrow price range.
🔒 Support or resistance appears in places where orders are clustered. When quotes approach this zone, three scenarios are possible:
1️⃣ there are few people who want to sell and buy at such prices - demand and volumes are falling, the course is unfolding, there is a rebound;
2️⃣ market participants are ready to sell and buy in large volumes - there is a breakdown and further rapid movement in the direction of the breakdown;
3️⃣ scores are about the same. The price can break through support and resistance, but without volumes it will roll back. This results in a false positive.