Support and Resistance

Support and resistance levels

Support and resistance levels are incredibly simple to trade. However the downfall to trading support and resistance levels, they don't always work. So as I say in every other article, don't rely soley on support and resistance levels.
So, what are support levels? How about resistance levels?
Answer: They are the same.
                There is no such thing as a support level and a resistance level. They are technically just, levels. What makes them supporting or resistance is whether or not the current price is above or below them.  
Once the price rises past a resistance level, that level now becomes a support level.

Lets take a look at a real life example.

                Notice how the price touches(otherwise referred to as, tests)  that green box and reverses? That level is acting as resistance and is called a resistance level.
As a technical trader you would put a sell order near that area because you notice that at that price level, the stock has a tendency to fall. The same goes for support levels. Once you notice a pattern and identify the support, put your orders near that price level because the prices will tend to reverse when they hit that level.

And there you go, that is the basics of support and resistance levels. If you have any comments you can post them below and check out our other education pages and keep an eye on our watch list for helpful information. 

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