When the market again moves upwards, the lowest point reached before it started back becomes support. Rising line is drawn in a way to easily identify the support area at the bottom of the valley. In a downtrend, the trend line is drawn at the top, where easily identify resistance range (peak – peak). To create a growing (ascending) channel, simply drag parallel lines with the line upward trend and move the line to the position where the last touches top. Conversely, to create a downward (descending) channel, simply drag parallel lines with the line downward trend and move the line to the position where the last touches valley. You’ll have to decide which is the right time period for you. After you find an adequate period of time, go to the following period more to see in which direction the trend is moving, and then return to the period of time in order to trade. Adding by temporal dimensions of your analysis gives the bigger picture and the advantage of friends who trade in just one period. Make a habit to look more periods when you trade. You can choose three time periods that you will observe (M15, M30, H1), concentrate on them, only use them, and find out all you can about how the market works during that time frame. If you watch too much time periods, you will be overwhelmed with too much information and you will eventually be lost in all this. Always start analyzing the market in a way that you look ”big picture” ( the first H1 and M30, and M15) Use a long-term chart (H1) to find a trend, and then return to ”closer” market (M30, and M15) to decide on the entry and exit from trading.
If you look at the diagram above you can see the zig-zag pattern that is on the way up (bull market). When the market moves up, and then return, the highest point reached before returning becomes the peak. The minimum point reached before it started back now becomes support. Trend is forming in parallel with the oscillations of the market. Conversely worth the downward trend. One thing to remember is that support and resistance levels are not always accurate figures. Often times you will see the level of support or resistance and so will have to be broken, but soon after that you will see that the market is actually only tested level. There is no correct answer to this question. Some explain that the level of support or resistance broken if the candle close above that level. But you will find that this is not always so. In this case the price twice closed above the resistance level, but both times he fell back down under it. If you believed that it was a real breakout (punching) and you have bought this pair, you are badly hurt! Looking at the chart now, you can see and come to the conclusion that the resistance was not actually broken, and that is still in the game, but is now even stronger. When you assist in filtering these false breakout, the I advise you to think about Support and resistance as the “zone”, and not as concrete numbers. One way to find these zones is drawing support and resistance on a line chart instead of the chart with candles. The reason is that line chart shows only the closing price, while candles are displayed and extreme peaks and valleys. These peaks and valleys can be misleading, because often times the only “dud” instead of strong market reaction.
An area of resistance or support thereby becomes even stronger. Trend is probably the most common form of technical analysis that is used today, but it is also one of the least utilized. When properly draw, can be accurate as well as any other method. Unfortunately, most traders do not draft them properly or try to draw a line in such a way that the lines correspond to the market, rather than to make opposite. The upward trend line is drawn at the bottom along with the line of support that is easy to identify (valley). The declining trend line is drawn on top of the area where it is easy to identify the resistance line (peaks).
If we go a step further and draw parallel lines with the line upward or downward trend, we get upward channel, simply drag the parallel line with the upward trend line and then move the line to the position where it touches the back of the top. That should do the same time when you make to get downward channel, simply drag parallel lines with a downward trend line and then move the line to the position where the last touching the lowest point (valley). That should do the same time when you make a line of trend. When price touches the lower trend line, it can be used as a reference point for shopping and opposite when the price touches the upper trend line, it can be used as a point of sale.
Find support and resistance levels. As already mentioned above, when you want to buy an instrument, it is best to buy near support levels. Using the same logic, the best place to sell the instrument will be close to the level of resistance. The level of resistance is usually a previous peak. Because the tip of the resistance broken, it will usually provide support on subsequent pullbacks. In other words, the highest level of the old becomes new low. In the same way, when the level of support is broken, it will usually produce selling on subsequent recovery. Old lowest level then becomes the new highest level.
The level of resistance: Selling with the expectation that the price or exchange rate fall.
USD/JPY is under pressure. The immediate trend remains down and the momentum is strong. with targets 119.95 and 119.65 in extension.
Short positions below 121.2 with targets 119.95 and 119.65 in extension.
Supports and resistances levels
Level of Support: Buying with the expectation that the price or rate increase.
rebound. The pair has broken above its resistance and remains on the upside with targets 1.0915 and 1.0985 in extension.
Long positions above 1.0655 with targets 1.0915 and 1.0985 in extension.
Supports and resistances levels
Trend lines are one of the easiest and most effective graphical tools.
The straight line connecting two points on the graph. Lines growing trend merge two consecutive low point, a line downward awning connecting two consecutive top. Prices will often pull back to trend lines before resuming their trend. Breaking of trend lines often signals a change in trend. The trend line becomes valid, if it is touched at least three times. Resistance Point or Level/Point of resistance or level – price recognized by technical analysts as that is likely to reject and continue in the opposite direction, but if broken through is likely to lead to a significant jump or price will be dropped. Support – level price at which the expected purchase. Break in the support often leads to lower prices. Trend – refers to the direction of movement of the price. Growing peaks and troughs represent an upward trend, declining peaks and troughs represent a declining trend. The range in trade is characterized by horizontal peaks and troughs. Trends are divided into: main (over one year), medium (between one and six months) or less (less than one month). Trend lines – Straight lines drawn on the chart below price (at the growing trend) or above the highest price (in decreasing) determine the slope of the current trend. Punching trend is usually signal a trend reversal.
Support and resistance lines that illustrate the ongoing battle between the customer (optimist) and sellers (pessimistic). Support levels indicate the price level for which most investors believe that they will rise. As prices fall to support and becomes lower, customers increasingly want to buy, and sellers want to sell less.
Resistance levels indicate the price level for which most investors believe that they will fall. As the price changes according to the resistance and becomes higher, sellers are increasingly looking to buy, and buyers increasingly want to sell. As long as the price of the security is moving between support and resistance levels, the trend will likely continue. Punching levels of support or resistance may be a sign: accelerating trend a trend reversal. When you break through the resistance level, its role is reversed and it becomes a level of support. Similarly, when you break through the level of support, that level becomes a resistance level. Professional traders use support and resistance analysis for decision-making on trade and for determining when the trend accelerates or reverses. Knowing these important levels should affect the way your trading and significantly help to improve your results.
Another tool can help you is currency meter indicator which identifies trend direction.