Support and resistance

by Feb 15, 2019Crypto, Forex, Reits, Stocks/ETFs0 comments

What are support and resistance (S/R)? In technical analysis (i.e., the study of the charts), they are very important levels where the price is more likely to “bounce”.

A support is a zone that the price may hit from above and then bounce up. A resistance is a zone that the price may hit from below and then bounce down. There are three main types of support and resistance:

  1. Horizontal: S/R are horizontal zones
  2. Trendline: S/R are zones with a slope
  3. Indicators (e.g., Bollinger bands, moving averages): S/R are determined by some indicators.

You can find below some examples.

 

horizontal-support-resistance

Horizontal S/R

trendline-support-resistance

Trendline S/R

moving-average-support-resistance

Moving average S/R

There are many ways to use S/R, not only to decide when to enter with a long or short position but also where to take profit for an open position. If you would like to know more about S/R, and how to identify them automatically, have a look at the following videos.