What is support and resistance ?
By definition support and resistance are price levels, where price has reacted in the past and may react again in future. The support and resistance levels represent a concentration of buying and selling activity. Support and resistance kind of provides a bounding box for technical analysis.
Without the existence of support and resistance , we have nothing but an unpredictable and random movement of price from one point to another.
What is Support Level ?
A support level is one where price moving down halts and reverses back. Price approaching this level tends to bounce back from this level. In below chart you can see the support levels at the bottom of the chart.
These levels provide the lower boundary to the price movement.
What is resistance Level ?
A resistance level is the one where price moving up stops and reverses back. Price fails to go beyond this level on more than one occasions. You can see the resistance level on the top of the above chart.
This level kind of provides a ceiling to the price action.
Support and Resistance Trading Strategy PDF
You can download our free eBOOK Support and Resistance Trading Strategy pdf absolutely free here.
The book gives you a foundation on support and resistance and an easy to follow trading strategy which can be used in stocks , forex , futures etc.