Forex resistance serves as the peak, which caps the level of the price of currencies. The minimum and maximum values of the trend in the technical analysis are determined by their respective names, which act as support and resistance levels. These levels are areas where the majority of traders are ready to either buy or sell the asset. The level of support points to the area where the consumer’s interest is high. At this level, the price is considered to be very attractive to open long positions, and many traders decide to buy an asset at a time when its value is close to the support line. The resistance level is an area in which the interest in the sale of high. Traders are willing to go short and sell the asset at a time when its value is close to the area. How to Draw Lines of Support and Resistance Levels Support and resistance levels are essential parts of technical analysis in trading. It is used to determine the trend. They check and confirm trends and should be used by all traders who employ technical analysis indicators. The support line connects the previous minimum values. The trend can be an observed or oblique line, a horizontal line. This depends on the prevailing direction of price movement.
- The trend going up is the line connecting the minimum values, which perform the support with a positive slope.
- If the trend is going in the direction of the bottom line, therefore, it stands as horizontal support.
- The trend that goes down the line connects the maximum values, according to the resistance with a negative slope.
- If the trend is going in the direction of the upper trend line, therefore it acts as horizontal resistance.
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