Supports and Resistances

This is one of the key pieces of technical analysis, and is therefore one of the concepts that we must learn and understand. Any operator is needed to identify where those levels will be as its reference.

A level of support will be given a price level where it is possible that the demand for buying existing stem the decline of a given currency.

A resistance level will be a certain price is contrary to what level of support where the demand for premium on the sale of purchase.


In the graphic we can see how the media and a basic resistance. Iran normally forming ups and downs, after rising a drop may occur, so that increase will be considered a resistance level which prevailed in the interest of the buyer and seller prices slowed their rise and fall.

In the graphic can also see price levels that are valleys that point would be considered a lower bracket. At that point the interest has prevailed on the seller and buyer, therefore, the prices went up and stopped his fall.

This usually happens when operators decide to work with target prices, so many traders decided to buy a certain price and sell to another, making this such a way as to create support and resistance levels. And indeed it is a fairly common way to operate with levels of entry and exit.

The strength of a level of support or resistance depends on the time and volume that accumulates in that area, but also depends on the number of times you touch that level of contribution. The more times the price rebound in that particular level without breaking, as well as the larger the current time it appears, the more important that level. If that level to break the movement in prices can be more dramatic when considering operators who had broken a key level.


When this happens, that is when it breaks a support or resistance level of criticism, it often results in a sudden movement which followed a decline to around that level was broken, and then continue upward or downward. This decrease is known as the "pull back" and is considered as an opportunity to open or close a position.

A pull-back can occur when you have broken the trend line that has performed as a support level of the channel, but when it happens that the pull-back trend line behaves as a resistance level as we see in the picture.



Support and Resistance Levels

While in other places that really are numerically levels of support and resistance, these levels are not exact numbers. The exact numbers are thinking that can lead us to believe that a resistance or support may have been broken, when the reality may be that the market is proving that it is so strong support or resistance. In candlestick charts these checks can be viewed with the shadows of the candlesticks, a shade higher indicates that the market is hesitant to break this level.

Therefore the levels of support and resistance zones are rather not accurate levels. As we can see in the following chart.



As you can see, even though in the second peak, the resistance is broken, it falls again, and we also tried a break of support when this occurs indicates a hesitation in the market, when a single , tells us that the resistance is strong.

Let's see with an example:




In this pair USD/CHF, we see that there is a resistance in 1.2500, we see that we have marked several candles seem to be breaking the resistance, but we can see that these candles closed below the resistance that we mentioned, so we can deduce that when the operators have found that resistance was strong.

Therefore, we believe that support or resistance zones are specific and not a number, so avoid making unnecessary purchases thinking that has broken support or resistance. We can establish such zones support and resistance using a linear plot.