How to draw support and resistance line on forex charts?

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technical analysis

Category: Tags: asked June 22, 2012

4 Answers

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from stockcharts.comSupport levels are usually below the current price, but it is not uncommon for a security to trade at or near support. Technical analysis is not an exact science and it is sometimes difficult to set exact support levels. In addition, price movements can be volatile and dip below support briefly. Sometimes it does not seem logical to consider a support level broken if the price closes 1/8 below the established support level. For this reason, some traders and investors establish support zones.Resistance levels are usually above the current price, but it is not uncommon for a security to trade at or near resistance. In addition, price movements can be volatile and rise above resistance briefly. Sometimes it does not seem logical to consider a resistance level broken if the price closes 1/8 above the established resistance level. For this reason, some traders and investors establish resistance zones.

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On a technical chart, support and resistance lines appear as thresholds to price patterns. They are the respective lines where prices stop moving down or up.

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In an uptrend, where price reverses that is the resistance line and price retraces and bounce up a price level, that is the support line. Then it continues up and perhaps hit the resistance line again and stalls and later breaks it then that becomes the support line and .....

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In an uptrend, where price reverses that is the resistance line and price retraces and bounce up a price level, that is the support line. Then it continues up and perhaps hit the resistance line again and stalls and later breaks it then that becomes the support line and .....

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