IMPORTANT NOTES ON
SUPPORT & RESISTANCE
5 TIPS TO EFFECTIVELY TRADE
SUPPORT & RESISTANCE
1
SUPPLY & DEMAND
The idea with support & resistance is identifying
areas of high buying pressure (area of demand)
or area of high selling pressure (area of supply)
With this concept, support is equal to demand
while resistance is equal to supply
2
PROBABILITIES
Support & Resistance are not perfect.
There is a level of probability that these
levels might hold or break. We need to find
out the highest probable outcome.
This is why we need multiple confirmation
before trading support & resistance
3
TRENDS
In a bullish trend, support levels are
likely to hold while resistance levels are
likely to break.
In a bearish trend, resistance levels are
likely to hold while support levels are
likely to break.
4
PSYCHOLOGY
As far as trading is concerned, the ideal
thoughts of traders is to sell for profit
when price are high and invest (buy) for
bigger gains when price are low (cheap).
These concept are part of what makes
support & resistance levels
5
BREAKOUTS
Support & resistance are not always going
to hold. This is where we get the concept
of a breakout
A breakout is simply a broken support
becoming a potential resistance while a
broken resistance becoming a potential
support