There is not a single forex training course out there that doesn’t at least teach you about support and resistance. They are the most basic forms chart analysis you can find. Many people in the forex market use it all around the world to enter trades, others think it’s too basic and prefer more advanced indicators. Whatever your take on this is, the great thing about support and resistance levels is that it applies to all the markets. Whether you want to trade the forex market, the bonds, or any kind of stocks, support and resistance levels will help you make decisions; hence why it’s important to learn about it.

Support and resistance: what are they?

Support and resistance levels are lines that you can draw on your chart and that will show you in a more graphic way the key areas where the price will act on a predictable manner. A support level is an area where the price will stop from falling – it’s supported by the level. A resistance level is an area where the price will stop rising – the price resists to the level.

The great thing about it is that it’s pretty easy to spot, which is why it’s usually the first thing you learn when debuting a forex training course. You can just look at the chart and find key levels. Actually, an 8 year old kid could do it as well as any great trader!

Support and resistance lines can be drawn rising, falling, or flat. The flat lines are usually stronger.

Here are a few tips:

Stick to obvious levels. If you’re the only trader in the whole world looking at a random level, it’s not going to hold.

A line gets stronger with every hit, especially on higher time frames. If a line is touched 5 times, and the price bounced each time, it means the level is quite strong. If the level is key on a monthly time frame, it has more power than on a 1 minute time frame.

Get ready in case the reaction to the line you’re getting is not the one you expected. Things can go wrong; you need an exit plan and a predetermined risk. A good forex training course will teach you how to place the correct support and resistance areas and help you get an edge over the market with it.

Author's Bio: 

Brian Thomas is a Forex trader at Forex Training Worldwide. Our Forex course is the most comprehensive Forex trading course for beginners to Forex. Visit www.forextrainingworldwide.com for more details or call one of our Forex mentors to see how they can help you throughout your Forex training to ensure you make money from trading the currency markets.