Support and resistance are one of the most famous and common concepts used in the Forex online exchange market and everyone is having their own idea about these zones we will try to give you the best idea that can help you and it will make trading easy for you. it is one of the most useful zones that you can use for any trading strategy. You can trade in these zones and you can be a good trader using these zones. And these zones may be so useful while making any trading strategy.
A zone or a point where the price has stopped falling and it has changed its direction is called support.
A level or a point where the price has stopped moving up and it has changed its direction that area is called resistance.
What are the support and resistance zones
Understanding These zones in forex is very easy. It is like a game which we call pulling the rope. The two groups of people pulling the rope and the ain of both group is to pull the rope and win the game.
Here the group means the buyers and sellers and the rope is the actual rate of the currency pair. The buyers want the market to go for buy and the sellers want the market to drop that’s why there is always a fight and everyone want to rule over the market and the areas where the market change its direction that areas are known as the support and resistance areas.
As you can see in the above example AUD/USD currency pair it is an uptrend and the areas are drawn But there is another example in which there is one zone line first the price in on support line or area and when it breaks the support line and comes for a pullback the area which was support first is now resistance line as well and we call it support and resistance line.
In the above picture, you can see how the price break in the support line and turned into a resistance line and these areas are the best to trade when the price breaks the support line and comes for the pullback and touches the resistance line are the best place to enter the trade. Therefore support and resistance are the best and the easiest tool to use while trading.
How to draw The Zone
After understanding the support and resistance now it is important to understand how to draw support and resistance line and how to trade with support and resistance.
Thus The above image shows clearly how to draw support and resistance lines. at the start on the pic, you can clearly see how the prize rate turned from support to resistance. It is the best zone to draw our support and resistance zone and you can see how the prize pulled back at a zone where I think it is the best place to enter for a sell.
Therefore it is our first entry and our first take profit zone will be the next support zone if it breaks the prize our 2nd take profit zone will be the next support which is more then 50 pips.
So we will wait for the pullback and wait for the prize to go for buy you can easily see how the prize came for the pullback and went high for a buy. Until it reaches the next resistance zone which is the previous support zone.
Thus to be a good trader we should always make good analysis so that we make high profits and fewer losses. It is good to wait for the pullbacks and when it is good time to enter the trade then jump in the market with less stop-loss and high take profit.