Beginner's Guide For Traders About Support and Resistance Zones ?
Support and Resistance, what are they?
Support & Resistance zones are the base of technical analysis. Here's a couple of tips on how to draw them and use them in the correct way.
Firstly S/R ZONES are ZONES not lines. We see many charts with lines as their S/R zones, this limits the size of the supply and demand range, also limiting your trading area.
Secondly, a support and resistance zone needs to make at least 3 tests to make it valid. A structure with 3 or more tests confirms it is actually there. Many new traders get trapped because they trade based on invalid zones. We hope this helps you improve your S/R zone drawing and trading.
They are zones where the price has previously struggled to either break below or above.
This means that they are zones where the price will most likely struggle to either break below or above in the future. We look for these zones as they provide the best trading opportunities due to the number of reversals that occur at them.
Resistance zones act as a resistance to the price going up. Resistance zones are basically ceilings to the market. When the price breaks above a resistance zone, this tells us that the price is going up but the resistance zone that was just broken becomes support.
A support zone acts as a floor in the market and provides the market support from falling drastically. When a support zone is broken it tells us that the prices given directions is downwards, and the broken support zone becomes a resistance zone.
The more a resistance / support zone is tested, the stronger it is. Price can either break out of these zones or can bounce from them, the stronger the zone the stronger the move from the zone will be.
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