Feb
Technical Analysis Training: Support and Resistance Explained
One of the tough concepts that traders need to understand happens to be support and resistance . This often is because until you encounter them, they are actually invisible , and still it’s still tough to realize what’s going on without going with multiple timeframes .
There is a lot of effort and time that go into using technical analysis training to determine where support and resistance levels are in the market . Many different tools have been used , including those like candlesticks, moving averages, candlesticks, as well as retracement levels.
Some work and some don’t , and more irritating, some work some of the time but not always . The information on whether or not an indicator or tool is going to work is information worth a lot of money .
Because many people only use one tool, their efforts may fall short, and one timeframe is used in application, and try to apply it under all circumstances . Better results come when a variety of tools , each optimized for particular market conditions , are put to use in a very organized and thought out program that keeps in mind congestion and trend action . Technical analysis training will continue to show that progressing towards precision when applied to various timeframes at the same time will accrue and the differing results are taken into consideration .
The best results come when you put into play a comprehensive theory of action in the market that can help the trader understand what the market is doing right now , why the market is doing that, and what is likely to happen in the near-term future , and to give traders a look at what levels of support and resistance may be that as the market goes forward can be monitored .
A tall order ? Well perhaps , but various systems of technical analysis have been able to accomplish this feat.
The following are several definitions.
Something below price is support, and this force can push prices back up from where they fell when it is encountered . This is made up of market buyers that are there but waiting to take action until price reaches a certain level , or of position holders that are short and forced to purchase if the market begins going against them . Those buyers that bunch up around a specific price that causes support to act like support .
Something above price is resistance, and this force pushes prices back down to where they were when it is encountered . It consists of sellers who are present in the market but waiting to take action until price reaches a certain level , or of long position holders who may be forced to sell if the market runs against them .
Support and resistance can be identified with technical analysis that is conventional like a 10-period moving average . Or a more involved system can be represented like you learn in technical analysis training like Drummond Geometry .
With this method we see a more evolved use of tools to provide in support and resistance areas a higher time period overlay from the weekly and monthly charts onto daily chart . These more evolved methods give the trader a lot of support in his buy-sell decisions . When using this method you can project into the future areas of support or resistance, so traders can be prepared as the market goes on.