How to draw Support and Resistance?

 


Hello...how are you?

Well, In this article... I am going to talk about one of the most important chapters in the field of trading i.e Support and Resistance.

No doubt, This is one of the most widely followed concepts by technical analysis experts in the financial market as it helps to find the highest possible uptrends and downtrends.

What is Support?

Support is the price level that acts as a supporting partner for the buyers.

If the price of the stock is constantly in a downtrend then it is preassumed that the sellers won't be able to dominate any longer as it touches the support level.

The moment the candle touches the support level the candle will bounce back up in support of Buyers.

However, due to Market fluctuations if the candle breaks the support level. it is preassumed that sellers will dominate the market until the next support level.


What is Resistance?

Resistance is the price level that acts as a supporting partner for the sellers.

If the price of the stock is constantly in an uptrend then it is preassumed that the buyers won't be able to dominate any longer as it touches the Resistance level.

The moment the candle touches the Resistance level the candle will bounce back down in support of sellers.

However, due to Market fluctuations if the candle breaks the Resistance level. it is preassumed that sellers will dominate the market until the next Resistance level.

How to draw Support and Resistance level?

 Here, to illustrate the Support and Resistance level I am going to use IQ Option.

If you don't have an IQ Option account click here.

You can also sign up via the form given below.

 


Once you click the link above you will land on the IQ Option Homepage.



Now, enter your email, password and click Try Now.


Once you have signed up you land on the IQ Option dashboard.


Now, click on the chart and select candles from the menu.


That's it the basic setup is over!!!!

Lastly, click on Graphical tools and select Horizontal line from the menu.


 Click on the colours and select your colour for better visibility. Here for illustration, I am going to use yellow.

 Now, what you need to do is find a bearish high and bullish high at the same distance for Resistance level.


Similarly, you need to find the bearish low and bullish low for support level.


How to Trade with Support and Resistance?

Trading with Support and Resistance is dann very easy. let's check some examples.



Given above is a 30 mins chart and lot's of action has appeared between Support and Resistance level.

At the point, no (1) and (2)  The candle has tried to break the support level but however. are unable to do so as the support line act as supporting partners for the Buyers and bounced the price back up.

At point, no (3), the candle touches the resistance level and resistance level act as a supporting partner for sellers and bounced the price back down.

Similarly, at point no (5), the candle touches the support level and the support level act as a supporting partner for buyers and bounced the price back up.

 

Similarly, at point, no (6), the candle touches the resistance level and resistance level act as a supporting partner for sellers and bounced the price back down.


Winding Up:

So, this is the end o this article. I hope you have found this article helpful.

This article was all about How to Trade with Support and Resistance?, How to draw Support and Resistance level?, What is Support?, What is Resistance?



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