their risk to take advantage of short trades. By: Christopher Lewis, the absolutely most common and basic of all tools that are used in technical analysis is the concept of support and resistance. Part of their widespread appeal is that they are calculated in an objective way, so there is no uncertainty about where they should or shouldnt.
While my trading team and I are mostly on vacation for the month of July, I wanted to write a brief article giving 2 key clues to understanding forex support and resistance levels, which is also a follow up to my prior article the best.
Support and resistance explained One of the most foundational aspects of technical analysis is support and resistance levels.
These levels are key as they offer traders obvious places to limit and define their risk.
Looking at support, it is exactly what it sounds like: a spot where the price of a financial instrument is supported, or in other words: the pair has trouble getting below a certain point. These levels are also good places in order to take profits as price will often reverse at key horizontal support or resistance levels, if only to retrace before continuing the move, so taking partial profit or moving positions to break even makes sense. Typically for long positions that you take a support level, you can set your entry to or close to above the support level. From a trading standpoint however, you can buy from a support level or you can target your short position to a support level. On the contrary, you can target your long positions to a resistance level or you can sell at a resistance level. And many a times, the automated support and resistance levels dont work as promised.
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