Technical Analysis Training: Support and Resistance Explained
For traders, one concept that is hard to figure out is the concept of support and resistance. This may happen because you rarely notice support and resistance until you actually encounter it, and still without using multiple timeframes it can be hard to recognize what is actually happening .
There's a lot of effort that goes into making use of technical analysis training to find out in the market where support and resistance levels are. A variety of tools have been put to use, including moving averages, trend lines, candlesticks, and retracement levels .
Some work, some do not , and more irritating, some work some of the time but not always . Figuring out when an indicator or tool will work is information that is worth a lot .
Many people find their efforts have shortcomings due to just using one tool , and try to apply it to a single timeframe , and try to apply it under all circumstances . You reap better results when various tools, optimized for a particular condition of the market , are employed in a well-thought-out and highly organized program that takes into consideration trends and congestion. 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 .
Top results occur when a comprehensive theory of market action is employed that can help the trader understand what the market is doing right now , why it's currently doing it , what is probably going to happen in the near future , 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 .
Does it sound difficult? Possibly, but it has been accomplished in a number of major technical analysis systems .
Here's a look at a few definitions .
Support happens to be something that is below price , and this force can push prices back up from where they fell when it is encountered . Support involves buyers that are in the market but waiting to move until the price gets to a certain point , or of position holders that are short and forced to purchase if the market begins going against them . This group of buyers that flock around a particular price that cause support to actually support prices.
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 includes those sellers waiting to make a move until prices hit a certain point , 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 such as a 10 period moving average . Or it can be represented using a more evolved system taught in technical analysis training like Drummond Geometry .
A higher level of tool use is used in this method to create higher time period overlays of support and resistance areas onto a daily chart from the monthly and weekly charts . These more developed methods provide traders with more support when making decisions to buy or sell . With this method you will see that the support and resistance areas are projected into the future , so traders can be prepared as the market goes on.
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