Dancing with the LinesTechnical Beans

Support and Resistance – Technical Analysis Basics

By 07/19/2013 No Comments

Let’s try and explain support and resistance levels via dancing metaphors. Ever tried to tango like a pro? First, you need to find a partner. Next, you need to select a dance floor. Then, you need to feel the beat. And finally, you need to watch out not to get out of line.

Support and Resistance - Couples Dancing Metaphor Support and Resistance – Couples Dancing Metaphor

This was a human tango. How do currency pairs dance on the dance floor? Pretty much a similar procedure. We put currencies in pairs and watch them moving on the chart (dance floor) as they listen to the beat (market news) and are on the watch for the market sentiment so that they won’t get out of line. These “lines” are called “support” and “resistance.”

Support and Resistance Levels in Forex

Support and resistance are thought of as limitations for the currency pair to dance freely on the dance floor. All we need to do it to identify the support and resistance and use them to our analysis. If we figure where the pair is likely to stop moving further, we can make a better investment decision.

Support and resistance are two of the most discussed concepts in Technical analysis. They can come in various forms from very basic ones to more advanced and exciting ones. Let’s start with the basics.

Support and Resistance Levels Support and Resistance Levels

As you can see, every time the pair tries to dance in a specific direction, it is stopped at the support or resistance level. It is actually the trading super-powers who determine the movements, and after that the little traders like you and I try to discover the barriers and patterns.

 

Become a master of trading! Get Invest Diva’s books NOW!

Invest Diva Books Ichimoku Secrets Guide to Making Money in Forex

Experience traders (AKA Trading Grandpas) will be able to tell many stories about how certain price levels tend to prevent traders from pushing a currency pair price in a certain direction.

Resistance is a barrier that prevents the prices to go higher. That is because the super-powers are waiting at that level to sell the pair.

Support is a barrier that prevents the prices to go lower. That is because the super-powers are waiting at that level to buy the pair.

Get my updates. Free.

 

Related:

Tips and Tricks about Forex Trading Tips and Tricks about Forex Trading

Leave a Reply

 

 

  • Economic Calendar
  • Terms of Service
  • Privacy Policy
  • Disclaimer:Investing in the financial markets involves a risk of loss.
    You should only invest the money you can afford to lose.

    Invest Diva (KPHR Capital, LLC) and Kiana Danial are NOT a financial advisor. Nothing said on investdiva.com by Kiana Danial or other contributors is meant to be a recommendation to buy or sell any financial instrument.