One of the most difficult concepts for beginning traders to grasp happens to be support and resistance . This may happen because you rarely notice support and resistance until you actually encounter it, and even then it’s still tough to realize what’s going on without going with multiple timeframes .
There is a lot of effort and time that go into using technical analysis training to figure out where the levels of support and resistance happen to be in the market . A variety of tools have been put to use, including retracement levels, trend lines, moving averages, and even candlesticks .
There are some that don’t work and some that do, and more aggravating , some work some of the time but not always . The information on whether or not an indicator or tool is going to work is information worth a lot of money .
Because many people only use one tool, their efforts may fall short, and try to apply it to a single timeframe , and they work to use it under every condition. Better results come when a variety of tools , every one designed for a specific condition on the market, are used in a program that is organized and thought out that keeps in mind congestion and trend action . Technical analysis training shows that going further towards accurateness when applied to various timeframes at the same time will accrue and various results are considered .
You get the best results when you use a total theory of action on the market that shows a trader the market and it’s current status, why it’s currently doing it , what’s going to occur rather quickly, and to give traders a look at what levels of support and resistance may be that can be monitored in real time as the market steps forward .
Sound tough ? Maybe , but various technical analysis systems have accomplished this .
The following are several definitions.
Support happens to be something that is below price , and it is a force that when encountered pushes price back up into the range from where it came . It consists of buyers who are present in the market but waiting to take action until prices go to a particular level, or of those short position holders that have to buy if the market begins going against them. It is this bunching of buyers around a certain price that causes support to act like support .
Something above price is resistance, and it is a force that when encountered pushes price back down into the range from where it came . This involves sellers in the market that are waiting to act until price reaches a certain level , or of long position holders who may be forced to sell if the market runs against them .
Both resistance and support can be easily identified with conventional technical analysis using something such as the 10 period moving average. Or a more involved system can be represented like you learn in technical analysis training , Drummond Geometry being one example.
A higher level of tool use is used in this method in order to create more time period overlays of resistance and support areas onto a daily chart from the monthly and weekly charts . These higher methods provide traders with more support when making decisions to buy or sell . When using this method you can project into the future areas of support or resistance, so traders can be prepared as the market goes on.
