Support and Resistance

Support and Resistance Lines

One of the most common and easily made mistakes by new traders is completely ignoring support and resistance.

This is easy to understand when you consider most Forex education sites never mention anything about support and resistance. Most sites want to sell you an indicator that will allow you to trade ,rather than teach you how to trade for yourself.

Once you learn to place, use and understand support and resistance lines, then you will never need to pay for a signal service or use indicators ever again.

So What Exactly is Support and Resistance?

Bulls & Bears

Support = Buy Area

• buyers
• bulls
• support

Resistance = Sell Area

• sellers
• bears
• resistance

Support always equals a buying area. The words buyers, bulls, and support are interchangeable.

Resistance is always a selling area and the terms sellers, bears, and resistance are interchangeable.

Support & Resistance Areas

Area of Support

An area of support always appears below the current price. It marks out the area that buyers are likely to enter the market.

Area of Resistance

An area of resistance always appears above the current price. It marks out the area that sellers are likely to enter the market.

Placing Support and Resistance Areas

Support and resistance lines are a great way to see where price has bounced from in the past. You will often find that price bounces near the line, but not always exactly on the line. 

For this reason, I find it better to place support and resistance areas. These areas normally span 20 to 30 pips.

Source forex4noobs