“Trends, Support and Resistance

 > Explanatory Article by Marios Kyriakou, MSc Economics


About the author: Marios Kyriakou has a bachelor’s degree in Economics from the University of Cyprus and a master’s degree in Economics from the University of Warwick. He is also a holder of CySEC’s Advanced Certificate in Financial Services Legal Framework and a professional in Online Trading, Forex and CFDs with more than 7 years of experience.

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<Last updated 25.04.2020>

Dear reader,

Hi! If you are interested in online trading you should read the below that provides explanation about Support, Resistance and Trend formation.

 

What is support and resistance?

When the market moves up and then pulls back, the highest point reached before it pulled back is now resistance.

As the market continues up again, the lowest point reached before it started back is now support. With candlestick charts, these “tests” of support and resistance are usually represented by the candlestick shadows.

Break

Now, if enough selling and liquidation of losing positions happens at the broken support level, price will reverse and start falling again.

Bounce

As the name suggests, one method of trading support and resistance levels is right after the bounce.

 

What are trend lines?

The most common form of technical analysis

In their most basic form, an uptrend line is drawn along the bottom of easily identifiable support areas (valleys).

In a downtrend, the trend line is drawn along the top of easily identifiable resistance areas (peaks).

 

Draw a parallel line at the same angle of the uptrend or downtrend, we will have created a channel. Channels are just another tool in technical analysis which can be used to determine good places to buy or sell.

There are three types of channels:

  • Ascending channel (higher highs and higher lows)
  • Descending channel (lower highs and lower lows)
  • Horizontal channel (ranging)

 


 

“I hope I am clear on this one. If not, contact us on social media and we will do our best to help you.

Thank you for reading my articles and watching my videos.”

Marios Kyriakou

Disclaimer: This article is intended for educational purposes only and does not replace independent professional judgement. Its purpose is to act as a complementary educational service to society, promoting personal development and social, economic and cultural progress of citizens. While this content has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by the creator to the accuracy or completeness of the information presented or any other written or oral information made available to any interested party and any such liability is expressly disclaimed.
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