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Before anyone enters the market, we always encourage them to invest in their own self first — meaning learning the basic principles as the market is really too risky. With that in mind, here are some helpful tips on trading.
In the Forex market, traders must understand the process of finding support and resistance levels. If you can know the support and resistance properly, your trading method will increase at a higher rate. Though it’s a very simple process the rookie traders always blunder things in technical analysis. They use too many EAs, indicators, and tools to find critical trading levels. Eventually, they end up with a messy chart.
It will be tough for you to trade profitably if you don’t understand the use of support and resistance. In this article, you will learn about the support and resistance and also how to use them in the Forex market to trade profitably.
Know about the support and resistance
In the market chart, support and resistance have a specific level. When the market moves it moves with a zigzag pattern, with the help of that zigzag pattern you can identify the support and resistance. When the market moves up and suddenly falls, the point from the price falls after reaching the highest point is the resistance. A resistance acts as a barrier that limits the bullish movement of the trading instrument.
And when a market moves up again after it reached the lowest point that is the support level. In the market support and resistance forms continuously in the zigzag motion. In other words, support is such a place in the market, where the buyers start to gain momentum and push the higher. The term may seem confusing but every trader needs to understand how to identify the support and resistance.
Setting entry or exist points
You can use the support and resistance level to place your entry or exit points on the chart. At first, you need to know how you can use then in your entry and exit points. If you want to use strategies in your trade, you should have a clear idea about the support and resistance points. Learn about the candlestick pattern so that you can short the pair after seeing the bearish price action signals at the critical levels. As a user of the price action signals, you must use the best trading platform. Search the term online trading Australia and you will find brokers like Rakuten is serving its clients maintaining a high standard.
As the support and resistance change continuously, you need to keep your eyes on the levels to get the price action. When support is broken it becomes resistance and vice versa. So, you need to set the entry and exit points according to the support and resistance level, and only then you will be able to save yourself from unwanted loss.
Why you should trade in the support and resistance level
The best way you can trade in the market is by simply following the flow of the market after the price has moved towards the level of support or resistance. You need to buy when you observe the price touches the support and is bouncing in the bullish direction. Similarly, you should sell if the price touches the resistance and is bouncing towards bearish. You should always keep an eye to the movement of the market so that you can clearly understand whether it’s a support or resistance level and by this, you can make profits in your trade if you can identify the levels properly.
Conclusion
In the zigzag movement of price, any top point can be the resistance level and any bottom point can be the support level. The more you will understand the levels the better your trading will be, to maintain a trading strategy the support and resistance levels play a crucial role. If you want to trade profitably and want to cut off unwanted loss then you must understand the support and resistance level precisely. Try to take advantage of the demo account to learn more about support and resistance level trading.
