QUICK INFO: Support and Resistance levels are defined by manually drawing the horizontal lines on the forex charts. S/R levels act as support and resistance for the price. Defining the S/R levels is a very helpful analysis technique and can serve as a base or additional confirmation with many forex or binary options trading strategies.
Recognizing and plotting the historical support and resistance levels on to the technical analysis charts is one of the basics each technical analysis trader should be familiar with. Manually drawn horizontal lines on openings and closures of trading candlesticks preceding the larger market reversals can help us determine possible future support and resistance levels. Generally accepted understanding is that a valid support or resistance level is defined once the price bounces of specified level for two times. On all future touches of this level we can expect the price to resist a breakout and we can trade a reversal pattern. After a certain period of bounces the price will form a breakout.
Breakout can be understood as the price breaking trough a historical support or resistance level and usually also out of a certain trading range. If a breakout happens, which eventually will happen, it will often form a distinctive pattern in form of breakout candle followed by retracement candle and later followed by another breakout candle, closing above the previous high or below the previous low, that serves as the breakout confirmation. Many trading strategies and systems can be developed upon this basic and simple understanding of support and resistance levels - either for trading the reversals or breakout patterns.
For additional information and understanding of breakouts take a look at the AutoBinary Signals Breakouts Strategy video.
LIKE THE SITE? CLICK FOR SUPPORT
|It is a big help and motivation for me to continue running and improving this website. Thanks!|
24option is the world's biggest broker with great educational program for beginners. Get personal support, tutorials, free webinars, demo account,trading signals and more.
I use 24option for over 3 years and I feel very confident to recommend this broker to any trader.
To visit 24option website - CLICK HERE
Stockpair is one of my favorite brokers which I follow and trade with for the last two years. Stockpair is the 4th most popular broker in the world, but I feel confident to rank it as #1, side by side with 24option.
To read the full review and learn why I consider Stockpair to be one of the best binary options brokers - CLICK HERE.