level of support and resistance - is the basis of technical analysis, concepts that are familiar not only to professional traders, but also beginners.Experience has shown that prices on the trading tools vary within a clear price channel.Its upper limit - a level of resistance and the lower boundary acts as a support line.Sometimes direct flow smoothly from one to another, performing exactly the opposite function.Very popular trading systems, which are based on it build levels.This is due to the simplicity and accessibility of tools for the analysis of the graph.
Subtleties build levels: the psychology of trading
level of support and resistance lines up on the basis of the chart topping bands, also known as pivots.Construction of lines can be carried out after the formation of only one pivot point.When the price after the turn again reached the previous high or low, and can not break through it - it is pure psychology, which is due to the uncertainty of market participants in their projections and determine the future direction of prices.Ultimately, the price breaks the level and the trend is ever unfolding, from the extreme fighting, and goes in the opposite direction.The more times the price of an asset will fend off a certain level, the more power it will have.If you build a schedule, will form a kind of beacon.They warn of the presence of areas in which the price will behave in a manner characteristic of the pattern.
What is the support and resistance levels?
Support level is a line that the price is not able to overcome in a downtrend.It's kind of the point, which is perceived by traders as a place of successful entry into the market.When the price reaches the level of the said traders consider long positions.The area is a huge amount of pending orders, after activation of which the price heads south.Resistance level - a similar line, but one that is not able to break the price movement in the north.Resistance area is considered reasonable to open short positions.In the adopted install a huge amount of pending orders, which trigger pushes the price down.
Specificity mining levels
Every trader should be aware that the level of support and resistance - this is a very subjective notion, no different characteristic precision.Clean lines on the chart rarely work.A common focus on certain areas when making trading decisions.Areas of support and resistance - a price range, which is concentrated a large number of orders.The situation is caused by the use of the majority of traders in their trading strategies identical methods of technical analysis.The dominant number of market participants choose between a similar point of entry into the market that determines the price movement.When the price crosses one of the levels, comes a clear signal for the purchase or sale of an asset that promoted the acceleration of motion at a given time.The premise stands mass closure orders on stop orders, which were focused on the return movement.Studying how to define support and resistance levels, it is necessary to take into account the fact that the price often moves from one channel to another, which determines the transformation support resistance and vice versa.
consensus - the key to successful trading
support and resistance levels (an indicator helps to define them as accurately as possible in seconds) is visually perceived by almost all participants in the foreign exchange market.This line, which for a period of time hinder the movement of prices within a certain range.Fields are always considered by traders as a potentially profitable entry points.Price consensus unfolds in the opposite direction.Easy to link applications in trade defined history.Correct technical analysis works in 90% of situations.Even if the location of the extrema at different levels run between them is insignificant, and trade efficiency falls.
Strength levels and its impact on the price
level of support and resistance can have a completely different force.Parameter will depend on how often and how to react to the price line.The more was formed rebound from levels in history, and the more powerful impulses were formed as a result of contact with a price, the greater the force will have the tools of technical analysis and the greater the likelihood that the price once again unable to break the range.When the price repeatedly ignores the line, we can say that the use of them in the trade standard will be ineffective.The attention of participants of the currency market attracted to the area of concentration of orders, which are alternately performing the role and support and resistance.The strength level allows you to make the most accurate forecast as to the future developments.
Does the role of the foundation?
Trade after hitting the important lines or profit to rebound very simple, because it does not require analysis of fundamental factors.Reaction rates definite value can be caused by several factors simultaneously.The prerequisites may be orders to buy or sell, the predominance of opinion as to what the market has already exhausted itself, or hope for any strength to continue the movement.If the information comes from analysts, explaining the reasons for the bounce or break, you can say in advance that it serves no more than a bluff.
Subtleties of construction or rules that violate prohibited
trading strategies, support and resistance levels which play a dominant role, reduced to the purchase of the lines of support and resistance from the sales.Sometimes, the rate can be made precisely on break of key lines.The ability to extract from the base of technical analysis is based on the ability to benefit properly build key line.The ideal line, in which you can profitably enter the market must comply with the basic criteria.Otherwise, support and resistance levels, forex is not recognized, will lead to a drain of the deposit.Working priority and considered that line, by which the price of the trading instrument bounced at least twice.The higher the price reacts to certain price levels in an identical manner, the higher the power level.Levels that performed well in the history, in comparison with those of spent relatively recently have a secondary role.
No professional trader or a better indicator of support and resistance levels are not able to build up to a point.Experienced market participants are well aware that the price often breaks the channel, and then with new force repelled by its upper or lower limits and should be reversed.Allowed a situation where the price simply does not reach the levels, but still intensely unfolds in the opposite direction.These inaccuracies and errors must be considered when applying the tools to trade.When the levels of their way several times the price of first in one and then in the other direction, they begin to be ignored by the majority of market participants, and their application within any strategy becomes ineffective.Given the lack of precision punktovoy lines make it possible to trade at a ratio of stop to the profit in the range of 1: 3 or even 1: 4 or even more.
Building levels at different time intervals
maximum efficiency and is considered to be less risky trade, when a trader undertakes to build a graph on multiple time frames.This approach allows us to see the situation as clearly as possible on the market and, consequently, helps to make the right trading decisions.Buying or selling the asset will be accompanied by a minimal risk when levels with different timeframes will be the same.The strategy will avoid opening trades against the trend, which will increase the chances of making a profit.It is necessary to note that the levels will not always be strictly horizontal.Allowed superimposition on the chart with a slight slope diagonals.The clear support and resistance may occur in the terminal not only during the flat, but also when descending and ascending trend.
comparison of levels and other technical analysis tools
considered to be an effective approach to trade when the support and resistance levels (an indicator of their plotted for a few seconds) compared with other analysis tools.You can talk about the use of options in trade levels, which show the price tags with the highest number of orders at the close of transactions on profit.As an alternative permitted the imposition on the chart angles Gann and Fibonacci levels.Welcome indicators that can show the volume of accumulated funds in each price range.To receive stable profits, not enough to know how to determine the level.You should be able to keep track of additional signals.Chance of a campaign on the level of prices in the south and to the north is exactly 50%.Hope for success in trading is not allowed.The forecast must be supported by at least three powerful signals, that is almost impossible to refute.Understanding how to define levels of support, resistance, only improves, but does not form a strategy.