Support and resistance points are very important indicators in forex and CFD trading, there are many applications of trading support and resistance levels and not only in forex, but also in other financial markets and in this article, you will discover the levels or points of support and resistance “S&R” and the psychological element of support levels Resistance and Fibonacci to find support and resistance points, Wolf waves and more as well.
Regardless of whether you are day trading or long-term trading, the concept of support and resistance is one of the basic concepts that must be understood when it comes to technical analysis.
There are many ways to identify S&R points and how can traders distinguish the most important levels of support and resistance, and above all what support and resistance points should be considered important? What is the concept of supply and demand:
If a trader decides to place all the lines on the chart, they will not even be able to see the price on the chart because the price will simply fade behind all these lines, then the traders must choose the best support and resistance levels or else the chart becomes unreadable and usable.
Support and resistance points become valuable only when the market actually respects these levels in the majority of cases and if support and resistance levels are used only occasionally or even rarely, then there will be no benefit to the trader to place them on the chart.
Forex analysis looks at potential market movements for the next month or year, and even if it is noticed that the market level changes from its level today, traders never cancel their orders, so these orders and orders remain open waiting for the market to return to its required levels and those orders and deals the open distorts the market’s march and brings back price movements, which in turn will affect the levels of support and resistance in various time frames.
There are several types of resistance and support levels, and these three combinations are equally useful, although traders tend to develop one or two of them. The main levels of support and resistance are:
1/ Fixed support and resistance levels: they are the points of support and resistance that do not change and remain in effect at the same level, unless the price breaks and penetrates through them. Examples of fixed levels of support and resistance include the following: Rounded “psychological” price levels.
Annual maximum and minimum.
High and low candles.
Opening and closing candles.