9.1 – Support and Resistance
The best way to identify the target price is to identify the support and resistance points. The support and resistance (S&R) are specific price points on a chart expected to attract the maximum amount of either buying or selling. The support price is when one can expect more buyers than sellers. Likewise, the resistance price is expected more sellers than buyers. More information is in this video.
Let’s move on to the following video, where we will learn about Technical Indicators.
We recommend reading this chapter on Varsity to learn more and understand the concepts in-depth.
Key takeaways from this chapter
- S&R are price points on the chart.
- Support is a price point below the current market price that indicates buying interest.
- Resistance is a price point above the current market price, indicating selling interest.
- To identify S&R, place a horizontal line to connect at least three price action zones, well-spaced in time. The more price action zones (well spaced in time) the horizontal line associates, the stronger is S&R.
- S&R can be used to identify targets for the trade. For a long trade, look for the immediate resistance level as the target. For a short trade, look for the immediate support level as the target.
- Lastly, comply with the checklist for optimal trading results.