In the world of trade, resistance and support are two of the most powerful pillars. To build a successful strategy, it is vital to include one out of support and resistance to them. Support and resistance offer clues to the investors planning to invest in the market and ideas to trade for profits. Today the support and the resistance. One can know the support and the resistance by reading the technical analysis reports to conclude three point the trader should focus on –
- Trade direction
- Entry time
- Exit point
Support is the currency pair below the difficulty price level and resistance is above the difficulty price level. Think of the area between resistance and maximum profits. The pair of these two terms will keep on changing between two levels until you encounter the breakdown situation.
Theoretically, support is the level for price in demand with strong purchasing power to prevent the price from declining drastically. Rationally, the price started to get closer to support and became cheaper in process. After buyers consider it as profitable deal and invest into it. On the other hand, sellers found it as the deal of loss as they are getting least profit on selling something they expected more from. In that case, the demand is compensated by supply (seller), demand (buyers) on agreement. They restrict the price from fluctuating or falling below. According to Forex Market experts like Barry Sendach, it is to stabilize the market. One day everyone has to face the loss situation. To make it bearable and neutral for all, marketing organizations restrict the pricing values to reduce the seller’s loss and limit the buyer’s profit. This equalizes the investors’ money. Otherwise, no one will sell his assets and there will be no trade.
Most of the market experts like Barry Sendach suggest people of one rule, more experience they have in the market, stronger support and resistance level they will gain. This rule is clearly mentioned in the daily charts. So, if you are a newbie planning to invest in in Forex Market, plan for three things – direction, entry and the exit. Surely, you will have a profitable trade.