C_G_GMTCentrum_LM_AL_Basic Forex Education_11. Support and Resistance in Forex

Lesson 11: Support and Resistance in Forex

Support and resistance are two of the most popular concepts of technical
analysis. These levels are prices at which there is a barrier where the price would
either stop or reverse at the given level.

Support is a level that prevents prices from being pushed downwards.
Resistance is the level that prevents prices from being pushed upwards. There are
three golden rules for support and resistance.

The longer the price stays at the support or resistance level, the stronger it
gets. This happens because the more obvious the level becomes, the more traders
will be placing their buy or sell orders there.

When support or a resistance-level breaks, the stronger it has been, and
the stronger the next move will be. In theory, every support should become
resistance and every resistance should become support.

Here you can see the price was rising and met resistance. When it broke
through it was this same level from the upside and it became the new support.

The same can be seen in down-trend; the price was falling and it met support. It
managed to break through and tested this level as the new resistance.