Guidelines for Support and Resistance

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    Guidelines for Support and Resistance


    Overhead resistance Overhead resistance occurs when selling pressure overcomes buying demand, sending price lower—at least for a time.

    Support Underlying support occurs when buying demand overcomes selling pressure, putting a temporary floor beneath the stock

    Support areas can act as resistance and resistance areas can act as support.

    Horizontal consolidation regions A horizontal consolidation region is an area of horizontal price movement that has lots of price overlap with a flat bottom, flat top, or both. When price bumps against it, the forex pairs often reverses direction or stalls. Long and tight HCRs (lots of price overlap) work better than do short or loose ones (meandering price).

    Do not place orders to buy and sell, or place stop loss orders at numbers ending in zero. That is where everyone else will place their trading orders , perhaps triggering unusual price moves

    Use the next closest round number (a number ending with a zero) to guess where price is going to stall or reverse, even if the forex has never climbed that high

    Objects that show support will often show resistance in the future and vice versa.

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